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Corporate Asia headed for weak show

Standard & Poor’s, the leading global ratings agency, said the first quarter of 2009 is likely to reveal ugly corporate performances, dampening market sentiment in the first half of 2009.

business Updated: Nov 26, 2008 21:03 IST
HT Correspondent

Standard & Poor’s, the leading global ratings agency, on Wednesday said the first quarter of 2009 is likely to reveal ugly corporate performances, dampening market sentiment in the first half of 2009.

“With economic growth anticipated to rebound in second-half 2009, we believe that equities are likely to have a strong fourth-quarter 2009 as the recovery becomes apparent and investors begin to re-rate stocks upward,” S&P said in its report titled “Navigating The Storm — How Will Asia-Pacific Fare?”

Globally, growth forecasts have worsened in the past few months and credit conditions remain tight. Against this backdrop, 2009 will be a challenging year for all economies, and those in Asia-Pacific will not be spared some degree of hardship. But good underlying growth fundamentals mean that Asia-Pacific is relatively well-placed to navigate the global storm, it said.

Growth forecasts, albeit weaker, have remained positive and governments around the region have already taken steps to support their banking systems via liquidity arrangements and deposit guarantees. Such moves should continue to strengthen investor confidence and address market skittishness. Transparency and the promotion of strong corporate governance are key to restoring a sense of normalcy to the markets.

“We expect the main themes in the near term, particularly over the next month or two, will continue to focus on the extent of the global economic slowdown. Asian economies are not expected to escape the global easing, and economic data and corporate guidance from third-quarter results are likely to be watched closely,” the report said.