Standard & Poor's Ratings Services said Tuesday it had released its latest thinking on the ratings outlook and key credit issuers facing cooperate issuers in the Chinese mainland, Hong Kong Special Administrative Region and China's Taiwan.

Since the publication of the last report card in October, 2003 overall credit quality has improved, with four companies receiving upgrades, three outlooks being changed to positive from stable, and five outlooks having been changed to stable from negative. There were no downgrades and no outlooks changed to negative during the period.

"For the most part the Chinese mainland has led the way in the current recovery highlighted by the upgrade of the sovereign credit in February 2004, said credit analyst John Bailey, a director at Standard & Poor's in Hong Kong. "There are increasing signs of a strong rebound in Taiwan's high tech manufacturing base. Similarly the outlook on Hong Kong's economy is much brighter than in the past, "added Bailey.

This view is supported by several recent outlook changes to Taiwan high technology companies and Hong Kong property companies.

Despite credit improving over the past few months, concerns remain. This is illustrated by the fact that over the short term the financial performance of Hong Kong property investors is likely to be constrained by negative rental reversions.

S&P said, in the Chinese mainland, the main challenge will be to slow the economies that it does not over heat. Some sectors of the economy, such as steel, autos, aluminum, and property are exposed to overcapacity.

In Taiwan, the political problems could ultimately have a negative impact on the economy, but it is still early days, said the S&P.
 
(Xinhua News Agency May 12, 2004)