Moody's publishes latest edition of "Inside ASEAN"

Moody's Investors Service has today released the latest edition of "Inside ASEAN", a quarterly publication looking at major credit trends prevalent in the Southeast Asian region.

"In this edition, we look at the implications of a correction in growth in China for the ASEAN economies and the long-term effects of ASEAN's demographics on economic growth," says Philipp Lotter, Moody's Managing Director for Corporate Finance in ASEAN and India.

Moody's says that the ASEAN economies are vulnerable to a pronounced growth correction in China, which is now the region's largest trading partner.

On aggregate, 12.2% of ASEAN's outbound shipments went to China in 2013, up from just 7.3% a decade earlier.

In such an environment, a downturn in Chinese growth in 2014 and 2015 that is greater than the estimated 6.5-7.5% in our baseline projection would have a significant bearing on ASEAN's macroeconomic outlook. And for the region, Singapore's economy is the most exposed, followed by Indonesia.

From a longer-term perspective, a young and rapidly growing population bodes well for economic growth in ASEAN. Specifically, it means a large labour force and attractive domestic market potential.

Although all ASEAN countries, with the exception of Thailand, will see their labour forces increase, marked differences exist in terms of projected growth. The labour forces in Laos, the Philippines and Cambodia, for instance, are projected to grow by more than 20%, while Vietnam's labour force will increase by only 7%.

"In this edition, we also highlight how Indonesian property developers will deal with slower economic growth," says Lotter.

Moody's expects revenue growth of Indonesian developers will slow to 11% in 2014, from 29% in 2013. Moody's expects the four rated Indonesian property developers to see growth in aggregated revenues moderate this year as a result of a high base of comparison last year and slower marketing sales. Moody's views developers with a higher percentage of recurring income and larger liquidity buffer, such as Lippo Karawaci Tbk (Ba3 stable) and Pakuwon Jati Tbk (B1 stable), to be more resilient.

This edition also includes summaries of various Moody's reports related to ASEAN, including reports on the stable outlooks for the Banking Systems in Thailand and Malaysia; on Malaysia's Sukuk Market, which we see growing by 10% in 2014 and 2015; and on how Southeast Asian high yield companies are managing their foreign currency debt exposure.

source:  Moody's Investor Service