Virus hits Asian energy, exporters hardest, as analysts cut outlook

Virus hits Asian energy, exporters hardest, as analysts cut outlook


By Ritu,

Capital Sands

Concerns that extended factory lockdowns and social distancing rules will dent company profits prompted analysts to cut forecasts for Asian companies’ 2020 earnings by around 5.4% over the last month, Refinitiv data showed.

The reductions take the total cut in earnings estimates to 14.8% so far this year.

The companies most affected are those reliant on exports and on energy, following a collapse in oil prices and in fuel demand because of lockdown restrictions and border closures.

In the last month, companies dependent on the energy sector faced a 17.8% cut in 2020 forecasts.

Companies in export-reliant economies, South Korea and Thailand, were also hit hard as their profit forecasts were reduced by about 9% and 8.3% respectively.

Both economies shrank in the last quarter, with South Korea recording its biggest contraction since 2008 as self-isolation measures reduced consumption and global trade slumped.

The profit forecast downgrades followed poor first-quarter earnings results for many Asian companies, which reported a 19% year-on-year fall in bottom line, Refinitiv data found.

The consumer discretionary sector, which includes companies selling non-essential durable items such as televisions and automobiles, also faced big downgrades, the data showed.

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