APAC Credit Roundup: Supply Forecast, EM Asia FX Risks, China’s Sovereign Rating

Research evidence excerpt

APAC Credit Roundup: Supply Forecast, EM Asia FX Risks, China’s Sovereign Rating

ma.xing@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited

EM Asia FX Risks - Lessen but Linger EM, Economic and Policy Research

Asian FX remains a weak spot in EM, as external funding challenges, higher energy

costs, muted durable FX inflows and a firmer USD/rates backdrop continue to weigh Mahmoud Harb

(65) 6882-1640

on the region’s FX. Against this macro backdrop, we study how FX weakness could mahmoud.harb@jpmorgan.com

affect corporate credit across key Asian markets, finding that while many issuers have JPMorgan Chase Bank, N.A., Singapore Branch

natural or artificial hedges that should limit first-order impacts, vulnerability varies Emerging Markets Strategy

meaningfully by sector, balance-sheet structure and hedging strategy. We also see AC Fariha R Ahmmed

potential second-order impacts from various measures taken by central banks and (44-20) 7134-8537

governments to bolster their currencies, including higher policy rates, capital-inflow fariha.ahmmed@jpmorgan.com

incentives and FX-market interventions, which may influence funding costs and J.P. Morgan Securities plc

liquidity conditions.

Sector-wise, we think that Indian corporates appear broadly protected from INR For key risks and catalysts not already

depreciation, but renewables are the potential weak spot, especially where hedging described in this report, please refer to the

levels are breached. Indonesia faces acute FX stress, but corporate credit impact looks most recent Emerging Markets Corporate

mostly manageable. Indonesia faces acute FX stress, but corporate credit impact Coverage Report.

looks mostly manageable. For mining companies, the DHE SDA FX repatriation rule,