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Fitch Upgrades CN E&C, Steel, Cement Industry Outlooks to Neutral
Recommend 99 Positive 176 Negative 70 |
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Fitch Ratings revised its sector outlooks for the engineering and construction (E&C) and steel and cement sectors in China from Deteriorating to Neutral, reflecting stronger-than-expected infrastructure investments, which is a primary driver for construction activities. Broad infrastructure investments increased by 9.8% YoY in the first four months of 2023, and Fitch expected the expansion to continue in 2H23, underpinned by continued special-purpose bond issuances and higher infrastructure investment targets set by local governments. Fitch predicted that the recovery in consumer spending has remained uneven and tortuous, Chinese authorities will likely continue to rely on infrastructure investment to boost the economy. This is likely to help offset weak property investments, which remain a drag on construction activities. Fitch's sector outlook for Chinese property is kept at Deteriorating. Meanwhile, some infrastructure projects launched in 2022 may have completed certain stages, which Fitch believed that would lead to activities picking up, as more projects start the subsequent phases of construction. There is sometimes also a time lag between the signing of contracts for new projects and the start of construction. Fitch noted that some regions experienced heavy rain in May that disrupted construction, but believed these factors are transitional and do not undermine the sector’s growth for the rest of 2023. AAStocks Financial News |
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