Liquidity in Asia improved in December but still remains weak compared with long-term averages, according to Moody’s Investors Service.
The researcher’s Asian Liquidity Stress Index (LSI) fell from November’s 31.1 per cent to 30.3 per cent in December, but Moody’s vice-president and senior analyst Brian Grieser cautioned that this was still historically high.
“Despite the improvement to 30.3 per cent in December, the Asian LSI remains above the long-term average of 22.6 per cent, highlighting the continued weakness in corporate liquidity across Asia,” he said.
Moody’s assesses liquidity by measuring the percentage of high-yield companies with an SGL4 liquidity risk score (meaning companies expected to have weak liquidity for the next 12 months) and increases the LSI score when “speculative-grade liquidity appears to deteriorate”.
Liquidity sub-indexes showed differences based on region, with the North Asian sub-index improving to 32.5 per cent from November’s 34.2 per cent, but the South and South-East Asian sub-index increasing from 25.6 per cent to 26.2 per cent.
“In December, Moody's downgraded two high-yield issuers, bringing the total downgrades of high-yield issuers in 2016 to 50, compared to seven upgrades,” the company added.
“This results in an annual downgrade/upgrade ratio of 7.14 times, the highest level since the fourth quarter of 2009.”
The balance sheets of the big four banks are increasingly exposed to residential mortgages, as other forms of revenue generation become less...
New data reveals Australian investment banking activities generated US$1.4 billion in the first nine months of the year, a decrease of 27.9 ...
Bloomberg has announced US equity benchmark capabilities that will form the basis of its new ESG index family of investment products. ...