The most vulnerable Asian companies as recession risk rises
Head of Equity Strategy
Summary: European banks dominated our top 30 list of the most vulnerable companies yesterday. We got overwhelmingly feedback and clients have asked for an Asian version. We crunched the numbers and the Asia list is dominated by Japanese banks showing the weak spot for Asian equity markets. Elsewhere in Asia, India had to step in tonight and rescue the country's fourth largest lender Yes Bank in a sign of more stress in the financial system.
Yesterday, we released the list of the most vulnerable companies in the global equity market and the response was overwhelmingly positive. We have gotten many requests for an Asian version so we just crunched the numbers. The list is dominated by Japanese banks which show where the weak angle is in Asia should the recession turn out to be severe. As we stressed yesterday the worst-case scenario is another credit crisis so everyone investor should make watchlists of credit spreads, high yield spreads in energy, airliners and leisure stocks.
Cracks are emerging everywhere and today India had to rescue its fourth largest lender Yes Bank with a $49bn balance sheet to increase confidence in the country’s financial system. Withdrawals are being restricted as a rescue plan is due in the next 30 days. These are signs of real stress in financial markets and as we talk about in this morning’s Market Call podcast it’s clearly risk off into the weekend.
We are drumming for lower equities here but we also acknowledge that there is always a reaction to an action and thus government rescue is on the way. This will create bounces in equities. To be prepared for these moves we are preparing a rebound basket of high quality beaten down stocks.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
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Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.