Bangkok--6 Sep--Standard & Poor's
Standard & Poor's Ratings Services believes a financial crisis similar to the one that hit Asia in 1997 is unlikely to recur, as banking systems in the region are now in a better position to weather possible stresses, according to the "Asia 1997 Retrospective" series of three reports published today.
According to the report, "Asia 1997 Retrospective: Repeat Of 1997 Crisis Unlikely, But High Leverage A Worry," key factors that set the scene for the crisis are no longer as prevalent now as they were in 1997.
"Unlike the situation in 1997, Asian companies now have lower foreign currency debt exposure or hedging policies against foreign exchange risk, and sovereigns have bolstered their external positions with stronger reserves," said Standard & Poor's credit analyst Terry Chan. "Nevertheless, the overall increase in the debt of sovereigns and, to a lesser extent, corporates remains a concern."
The report examines nine system risk factors in 2005, including banking system structures, government debt, and international reserves, and offers a comparison with the situation in 1996. The study covers 10 Asian financial systems-- China, Hong Kong, Indonesia, India, Korea, Malaysia, the Philippines, Singapore, Taiwan, and Thailand.
Asia's banking systems have strengthened since 1997, although some have yet to regain their full pre-crisis credit strength, according to "Asia 1997 Retrospective: Today's Banks Likely To Survive Stress Scenarios," published Sept. 5, 2006.
"There is more governance, improved asset quality, and some consolidation in Asia's banking systems, and these are now better equipped to withstand potential crises," said Standard & Poor's credit analyst Adrian Chee.
"Nevertheless, our stress testing indicates that systems with low interest rates, significant net exports to GDP, and high exposure to an Avian flu outbreak, are the most vulnerable to sharp rises in nonperforming assets in times of crises," said Mr. Chee.
The third report, "Credit FAQ: Asia 1997 Retrospective," published Sept. 5, 2006, discusses the drivers behind the 1997 crisis.
TELECONFERENCE INFORMATION
Standard & Poor's is holding a teleconference today (Tuesday, Sept. 5, 2006) at 12:30 p.m. Beijing/Hong Kong/Singapore time to discuss the main issues raised in the commentary. To participate in the call, please use one of the following numbers:
Australia: 1-800-230-935
China: 10-800-852-1179 (for China Netcom user); 10-800-152-1179 (for China Telecom user)
India: 000-800-852-1236
Hong Kong: 3005-2050
Indonesia: 001-803-011-3814
Japan: 0053-1121-852
Korea: 0079-8148-006-847
Malaysia: 1800-802-232
Philippines: 1800-1114-3337
Singapore: 800-852-3576
Taiwan: 0080-185-6004
Thailand: 001-800-120-665-643
**Access PIN code: 705364#
For participants dialing from countries not listed above or those encountering any dial-in difficulty, please call (852) 3528-0090 for connection to the teleconference.
The report is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to [email protected] . Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com ; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Members of the media may request a copy of this report by contacting the media representative provided.
Ratings are statements of opinion, not statements of fact or recommendations to buy, hold, or sell any securities. Standard & Poor's (Australia) Pty. Ltd. does not hold an Australian financial services license under the Corporations Act 2001. Any rating and the information contained in any research report published by Standard & Poor's is of a general nature. It has been prepared without taking into account any recipient's particular financial needs, circumstances, and objectives. Therefore, a recipient should assess the appropriateness of such information to it before making an investment decision based on this information.
Media Contact:
Marc Eiger, New York, (1) 212-438-1280
[email protected]
Analyst Contacts:
Terry Chan, CFA, Melbourne (61) 3-9631-2174
Adrian Chee, Singapore (65) 6239-6306
Ping Chew, Singapore (65) 6239-6345
Eleanor Sheung, Hong Kong (852) 2533-3510
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 7,500 employees, including wholly owned affiliates, located in 21 countries. Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com .
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