After yesterday Merril Lynch consider Australia is the most vulnerable to economic crisis and Switzerland at the second rank. Today, Fitch Ratings lowered the outlooks of South Korea and three other emerging countries to "negative" from "stable" and cut the sovereign ratings of four others, see also the yesterday news. The Rating reflects higher risks to creditworthiness stemming from the global financial crisis and economic slowdown.
The outlooks on the long-term foreign currency ratings for South Korea, Mexico, Russia and South Africa, were revised down to "negative" from "stable," Fitch, one of the three major international credit ratings agencies, said in a release. A negative outlook means there is a greater chance of the actual credit rating being downgraded.
Outlooks on Chile and Malaysia, meanwhile, were lowered to "stable" from "positive," the agency said.
South Korea's A+ rating is four notches below Fitch's highest of AAA and six notches above "speculative" grade, generally regarded as "junk."
Russia, Mexico and South Africa are all rated BBB+, three levels above "speculative." Chile is at A, and Malaysia is at A-.
Fitch said the action followed a global review of the ratings of 17 major emerging market economies carried out "in response to the profound deterioration in the global economic and financial outlook."
Bulgaria, Kazakhstan, Hungary and Romania had their credit ratings downgraded by Fitch.
Brazil, China, India, Peru, Poland, Taiwan and Thailand had their ratings affirmed.
The agency said that contagion from the global financial crisis in advanced economies "triggered extreme volatility in emerging market asset prices" and caused "liquidity strains."
Foreign investors have fled emerging markets in droves during the crisis, cashing out of stock markets and sending funds back to their home economies and currencies.
In South Korea's case, Fitch expressed concerns that government support for the country's banks amid the credit crisis could undermine its external credit and foreign exchange reserve position.
South Korean banks and companies have struggled to secure U.S. dollars needed to meet foreign currency debt obligations as international lending has dried up amid the global credit crunch.
For Malaysia, Fitch said it considered the likely impact on the country's balance of payments from lower oil and other commodity prices along with weaker demand for electronics exports.
"Malaysia is one of Asia's more open economies and the region's only significant net oil exporter," Fitch said.
ETFs/Stocks :
UltraShort MSCI Emerging Markets (ETF) EEV $82.65Related Posts :
Sources :
- The Wall Street Journal: Fitch Lowers Outlooks of South Korea, Russia, November 11, 2008
Associated Press: Fitch Ratings lowers credit outlooks on 6 emerging economies amid financial crunch, November 10, 2008 05:50 AM
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