Fitch: APAC Corporate Outlook 2026 Broadly Resilient 📈

Fitch Ratings assigns a 'neutral' sector outlook for Asia Pacific (APAC) corporates in 2026, anticipating a mild improvement in credit metrics. Key credit drivers are expected to remain stable across most sectors and markets. • Key Positives: Easing input costs are projected to slightly lift aggregate EBITDA margins to over 15% (from ~14.5% in 2025), with marginal improvement in free cash flow despite uneven economic growth. • Major Risks: Geopolitics, potential tariff developments, and supply-chain fragility pose notable risks. Escalating US-China tensions, export controls, and policy shifts could raise costs and fragment ecosystems. China's excess capacity in certain products may intensify competition. • Sector Outlooks: • Deteriorating: • Technology: Due to exposure to global consumer weakness in electronics, though AI-linked products will benefit. • Automotive, Chemicals, Shipping: Exposed to unfavourable trade policies and structural headwinds leading to earnings pressure. • Under Pressure: • Construction (China): Persistent weakness in China's property market and softer infrastructure investment will weigh on activity and credit metrics in related sectors. Companies are expected to continue diversifying and localising production to mitigate disruption risks.