Wednesday Dec 24, 2025
Wednesday Dec 24, 2025
Wednesday, 24 December 2025 03:41 - - {{hitsCtrl.values.hits}}
Fitch Ratings has assigned a ‘neutral’ sector outlook for APAC corporates in 2026, reflecting its expectation that credit metrics will improve mildly across our portfolio of rated entities, with key credit drivers remaining generally stable in most sectors and markets.
“Geopolitics, further tariff developments, and supply-chain fragility will pose notable risks that could derail our projections for a recovery in credit metrics,” Fitch said.
It expects easing input costs to lift aggregate EBITDA margins slightly among our rated APAC corporates, to over 15% from around 14.5% in 2025, with free cash flow also improving marginally, despite uneven economic growth across the region.
Escalating US-China tensions, export controls and policy shifts may raise costs, fragment ecosystems and drive “China+1”/near-shoring, potentially lifting end-market prices and creating uneven access to advanced equipment.
“We expect companies will continue to diversify and localise production to mitigate disruption risks. China’s excess capacity in certain products could also intensify competition on other markets through exports,” Fitch said.
Persistent weakness in China’s property market and softer infrastructure investment will weigh further on construction activity and aggregate credit metrics in related sectors. China’s growth model is moving away from property and traditional infrastructure, pressuring construction companies’ performance and financial profiles.
Fitch also said the ‘deteriorating’ outlook on APAC technology reflects exposure to consumer electronics products, which are exposed to sustained global consumer weakness, and the potential for higher US tariffs to affect demand. However, products linked to AI demand will continue to benefit. “We have also maintained a ‘deteriorating’ outlook on automotive, chemicals and shipping because of their exposure to unfavourable trade policies in 2026, and because structural headwinds leave them exposed to earnings pressure,” Fitch added.
