Standard & Poor's Ratings Service yesterday released its biannual corporate report card on rated corporate issuers in the region, including China, Taiwan and Hong Kong, concluding that the region's upturning economies have led to an improvement in corporate credit quality.
"[The region's] overall credit quality has improved" since the publication of its report card in October last year, with no corporate downgrades or outlooks changing to negative between September last year and April," the report said.
"For the most part, mainland China has led the way in the current recovery highlighted by the upgrade of the sovereign credit in February 2004," said S&P's Hong Kong-based credit analyst John Bailey.
In late February, Standard & Poor's raised the sovereign rating for China from BBB/positive to BBB+/positive while saying in March that it had no plans to change its credit ratings for Taiwan despite the political upheaval following the nation's presidential election.
With China extending its recovery, there are also increasing signs of a strong rebound in Taiwan's high-tech manufacturing base, Bailey said, adding that, similarly, the outlook on Hong Kong's economy is much brighter than before.
According to the report, growth in Taiwan's industrial production has been led by the semiconductor industry, which has experienced a sustained increase in sales.
However, the political dispute arising from the election could ultimately have a negative impact on the local economy, although it's still too early to tell, Standard & Poor's said in its report.
Against the backdrop of an upcoming property recovery, weak performances by property investors in Hong Kong, which continues to experience a negative rental reversion, remain a negative factor. But Standard & Poor's noted that it will be a matter of time before rental incomes stabilize with underlying economic growth improving in Hong Kong.
Standard & Poor's report expressed concern over China's over-heated economy, saying its main challenge in future will be to slow it down, since some sectors -- including steel, autos, aluminum and property -- are exposed to overcapacity.
In the report, Bailey concluded by saying that "the future direction of corporate credit quality in greater China will depend to a large extent on how sustainable the economic recovery is in the US and how the mainland China government reacts to an overheating economy."
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
RSS