Moody’s: Asia-Pacific recession recovery to prolong, although easing Covid-19 lockdowns provide support

Asia
A man walks with his child past a view of commercial buildings and the government headquarters in Hong Kong July 16, 2020. — AFP pic
A man walks with his child past a view of commercial buildings and the government headquarters in Hong Kong July 16, 2020. — AFP pic

KUALA LUMPUR, July 16 — Recovery from the recession in Asia-Pacific is expected to be prolonged, although the easing of coronavirus lockdown measures should support a gradual recovery in the second half, rating agency Moody’s said.

Its group credit officer and senior vice president Clara Lau said the ability of businesses to recover will depend on the pace at which consumer demand rebounds, which in turn hinges on governments’ ability to restore confidence by reducing the fear of contagion.

“Fiscal and monetary stimulus programmes in both advanced and emerging markets have helped stabilise financial markets and provided temporary relief to companies.

“However, the operating performance and financing capability of companies are vulnerable to financial market shocks, particularly if a second wave of infections results in renewed lockdowns,” she said in a statement.

According to her, the rating trend in the second quarter (Q2) 2020 remained negative across Moody’s Asia-Pacific rated corporate portfolio, although the number of negative rating actions had decreased.

Moody’s listed 86 negative actions in Q2, down from 120 in Q1. Of these, 18 were sovereign-driven, related to India’s sovereign downgrade.

Excluding sovereign-driven actions, metals and mining, energy and property sectors accounted for the most among the negative actions, with each sector receiving nine. There were no positive rating actions in Q2 2020.

Meanwhile, among the ratings in Moody’s Asia-Pacific corporate portfolio, 29 per cent had negative implications, up from 26 per cent in Q1 2020 and the highest level since Q3 2016.

Companies that remain the most affected were auto and gaming companies, with over 50 per cent of issuers carrying ratings with negative implications.

At the same time, the share of ratings with a stable outlook fell to 69 per cent from 71 per cent over the same period. — Bernama

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