The potential impact of the European sovereign debt crisis on the Asian corporate sector is said to “manageable” according to Fitch Ratings.
In analysing the two separate routes the crisis could spread to Asia, Fitch has ruled that, “while certain sectors and geographies are more vulnerable than others”, the overall sector is in a strong position.
There are concerns the Asian corporate sector will suffer from reduced demand for Asian exports resulting from the crisis.
Fitch has said “a significant amount of trade in Asia” is self-contained and that companies heavily reliant on exports to Europe represent a relatively small group.
Sony is cited as an example of a company which is more exposed to the economic weaknesses concentrated in Europe and is contrasted with Samsung and its focus on developing markets.
China, India and Indonesia are said to be “relatively less exposed to global growth shocks” based on their exposure to developed domestic demand but Thailand, Malaysia and Mongolia are said to be at increased risk.
Any potential liquidity and funding problems are likely to be met by a corporate sector which is stronger and less leveraged than prior to the 2008 crisis, according to Fitch.
Equally, the majority of Asian companies are not overly reliant on non-Asian funding and are typically financed by domestic lenders.