Companies in the automotive sectors, steel, chemicals and business services in South and Southeast Asia are facing a big exposure to evolving US policies, including higher tariffs that may increase costs and reduce demand, said Moody’s Ratings in the report on March 17.
On the other hand, industries similar to mining, pus and gas, shipping, holding corporations and agriculture are less exposed to trade funds, because of strong domestic operations, diversified supply chains or direct operations in the US, noted the rating agency.
Car suppliers and luxury automobile manufacturers selling US-indirectly or by Canada and Mexico-Zostana tariffs. However, the scope of impact depends on how much costs they’ll transfer to consumers. Moody’s expects the manufacturer of Auto-Parts Samvardhan Motherson International Ltd. transferred higher costs to customers, but Dad Motors Ltd. could be handled. Jaguar Land Rover, a subsidiary of Dad Motors, derives almost a 3rd of sales from the USA and might see how the tariffs will fall, especially since all JLR vehicles sold in the US are produced in the EU or Great Britain – regions that also can face higher tariffs.
Steel and chemical corporations will see minimal direct effects from the proposed American tariffs, but they might suffer from the influx of surplus of steel and petrochemicals to Asia, deteriorating high supply prices and depressing prices. In the case of JSW Steel Ltd, the impact is somewhat cushioned, because its operations in the US only contribute to about 7% of revenues. Similarly, it is predicted that geographically diverse UPL Corp LTD operations will help to soak up the impact.
Indian IT corporations, similar to Dad Consultancy Services LTD (TCS) and Infosys LTD, are well prepared to take care of cost pressure from changing American policies, because of their strong profitability. However, the sector stays exposed to changes in the American immigration principles that may reduce the pool of talent for corporations consisting of foreign employees. To reduce the risk, corporations similar to TCS, Infosys and Hexaware Technologies Ltd. increased employment on land in the USA.
Meanwhile, escalating trade restrictions can decelerate global growth, reducing the demand for energy and reducing the prices of goods, warned Moody’s. This could also be burdened by mining, oil and gas corporations. Reliance Industries Ltd., which exports about half of the production of oil to chemicals, can face indirect risk attributable to global industrial interference. However, it is predicted that its strong balance consumes any drop in demand or profits. State oil and earth Corp. Ltd., which mainly serves the Indian market, stays shielded from the direct influence of tariffs.
Sectors similar to real estate development, real estate investment funds, telecommunications and games are largely insulated from US politics changes, because their corporations are primarily domestic, Moody added.
