Daily Dispatches - Fitch warns that 2014 will be tough for banks in emerging Asia
Banks in emerging Asia will need to brace themselves for a challenging year ahead, says ratings agency Fitch in its 2014 Outlook: Asia-Pacific Banks review.
Fitch says that nearly half the countries in the region that it monitors have negative sector outlooks for 2014, reflecting challenges expected from "higher interest rates, moderation in economic growth, and seasoning of loan portfolios after an extended period of rapid growth".
"That said, all countries except Mongolia have stable rating outlooks, reflecting a combination of factors. Many banks are entering this phase with healthy fundamental strengths, but not those in China and India's state bank sector where conditions have already exerted downward pressures on their viability ratings."
Fitch says the expected tapering of quantitative easing by the US Federal Reserve and issues related to China are the two key risk themes for 2014 that will have the greatest bearing on bank performance.
Growing linkages between China and the region, in particular Hong Kong, also means the region's fortunes will depend on how successful China rebalances from its unsustainable investment-driven growth model.
For developed Asia, most markets have stable sector outlooks. However, markets such as Australia, New Zealand, Singapore and Hong Kong have high mortgage indebtedness, and would be sensitive to sharp property price adjustments and rising unemployment.
People's Daily Online reports that a new survey reveals that financial services pay hikes in 2014 will top the leaderboard for salary increases in China.
According to a new survey, an average pay rise of 8.8% is expected for company employees in China next year but the financial sector can expect a 10.4% pay rise.
The CFA Institute says investment professionals are cautiously upbeat about prospects for 2014, with nearly 60% of respondents polled in a recent survey predicting an expansion of the global economy, up from 32% the same time last year.
But respondents in Singapore and Swizterland were the most critical about global market integrity, reports the Business Times.
Bloomberg reports that JPMorgan Chase & Co is seeking to sell a global investment unit in a push to simplify operations.
It has apparently been offering its Hong Kong-based Global Special Opportunities unit, which has about $2 billion in assets, to potential buyers in the past few weeks. The unit employs about 35 people.
Insurance Australia Group Ltd will buy Wesfarmers Ltd.’s insurance underwriting businesses in Australia and New Zealand for A$1.85 billion ($1.66 billion) to become the largest insurer in Australia, reports Bloomberg.