NEW DELHI: More than 30% companies across India, China, Korea and Indonesia have significant risk exposure and are highly vulnerable to the spillover effects of the Russia-Ukraine conflict, Moody’s Investors Service has said.
Refinancing risks, supply chain disruptions and high commodity prices are the main factors threatening these companies, Moody’s said.
“A higher percentage of rated companies in China, Korea, Indonesia and India are more vulnerable to the spillover risks compared with those in Australia, New Zealand, Japan, Hong Kong SAR, China and Singapore. Over 30% of companies in the former group of countries have significant risk exposure in either scenario, while less than 15% of companies in the latter five countries are assessed to have moderate or high exposure,” the global agency said.
The Russia-Ukraine conflict is impacting credit quality of many non-financial companies in Asia Pacific, which have already been harmed by lingering supply chain disruptions, the coronavirus pandemic and, in particular for speculative-grade companies, tight funding access, said the report.
According to the report, in India, high commodity prices and supply chain disruption expose about 42% of rated companies to significant risk. They are mainly in the oil and gas and automotive sectors.
In China, most state-owned enterprises and their subsidiaries, will remain largely resilient under either scenario, because of their strong positions in their respective industries as well as government backing. About 78% of privately-owned companies outside of the property sector also face low risk while the remaining have moderate to high risk exposure.
And about a third of rated companies in Indonesia have material risk exposure because they face elevated refinancing risks. Another third of companies, which are mostly into coal mining, will benefit from a rise in coal prices.