Coface puts Taiwan, HK on negative watch
Updated: 2009-05-20 07:20
By Joey Kwok(HK Edition)
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HONG KONG: French credit rating agency Coface has put Hong Kong and Taiwan on a negative watch list, citing the susceptibility of both jurisdictions to the global economic downturn.
The move follows Coface's downgrade in January to "A2" of the sovereign rating of both Hong Kong and Taiwan as their exports continued to fall, together with those of other economies in the region.
Yves Zlotowski, Coface chief economist for economic research and country risk, said the "A2" rating for Hong Kong and Taiwan is unlikely to stay for long.
"We don't see many weaknesses in the macro-economy in Hong Kong and Taiwan," he said, "Things are getting better in the second half of this year".
Zlotowski added that the economic fundamentals of Hong Kong and Taiwan remain strong, while the problem of high leverage and a spike in corporate debt are not major problems in the two jurisdictions.
Meanwhile, Coface said it is maintaining its "A3" rating on China's mainland because of its speedy implementation of highly expansionary monetary and fiscal policy, which limits the country's economic slowdown.
Coface CEO Jerome Cazes said companies around the globe have massively cut their orders since late last quarter.
Even so, Coface does not believe a global credit crisis will last for more than two years, he said.
(HK Edition 05/20/2009 page16)