European Debt Crisis Spreads And Asian Companies Slash Financing

The global market is worried about the export demand due to the worry of the European debt crisis. This year, Asia Pacific enterprises have sharply reduced the amount of financing to banks. This shows that most industries are still cautious about expanding, and the financing market is hard to reproduce the prosperity.

This year, the total amount of Singapore bank loans dropped by 72%, from $6 billion 500 million a year earlier to $1 billion 800 million.

Australia fell 17%, the lowest level since 2004.

Indonesia slipped 18% to its lowest level in 2006.

AtulSodhi, chief financing officer of the Asia Pacific region, CreditAgricole, said that the main reason for the low level of bank financing is that companies are reluctant to raise their financial leverage. "The problem now is that there is no demand, not enough supply."

Despite the strong recovery of Asian economies in the second half of last year, the growth of European debt crisis and the loss of market confidence also contributed to a 8.9% fall in the MSCI Asia Pacific Index this year.

Not only the "doomsday doctor" Roubini predicted that Europe would be trapped in the "two recession" because of financial difficulties. The Ministry of foreign trade and industry of Singapore also warned last Thursday that the debt crisis in Europe could exacerbate the "downside risks" of the global economy.

AtulSodhi pointed out: "most Asian enterprises are exporting to Europe or the US, but the demand for relevant markets is not ideal. Therefore, enterprises have no strong reason to invest heavily."

The Asian Development Bank (AsianDevelopmentBank) data shows that about 6 of the Asian Development China exports are exported to the United States, Europe or Japan.

However, the euro has fallen by about 15% this year, pulling the price of Asian exports to Europe in an instant.