China risk for Korea, Taiwan, Hong Kong, Australia companies

PHNOM PENH (Cambodia Herald) - Standard and Poor's has warned that companies in South Korea, Taiwan, Hong Kong and Australia risk an "immediate negative impact" from any abrupt Chinese economic slowdown.

"A further slowdown in the global economy and, to a lesser extent, a disruption in refinancing are the major risks facing Asia-Pacific companies," the international credit rating agency said in a statement released in Hong Kong Monday.

Credit analyst Kwon Jaemin warned that a major negative European surprise "could disrupt global financial markets and hurt Asia-Pacific companies.

"China's current economic slowdown is also affecting export growth," Kwon said.

The agency said the toughest sectors in 2013 were expected to be the capital goods, home building and metals industries.

"Our negative outlooks for sectors such as home building, metals and mining are largely due to cyclical reasons. However, exogenous factors such as the eurozone crisis and a slow recovery in the US could cause a deeper downturn than normal," Kwon said.

Standard and Poor's added that a potential hard landing in China "could keep profitability of the steel sector low over the next year.

"Aluminum companies in the country are also facing overcapacity, but they are more likely to curtail production when demand weakens.

"Companies in Korea, Taiwan, Hong Kong and Australia also face some risk of an immediate negative impact."

While default rates for Asia-Pacific companies are likely to go up, the agency said they were unlikely to rise to the levels that it expects for Europe or the United States.

"That is because Asia is unlikely to slip into a regional recession," it said.