Country risks generally increase for investors

The rising unilateralism, geopolitical uncertainties and global economic slowdown would mean more risks for investors and could threaten the survival of more companies this year, according to the Handbook of Country Risk 2019 released on Friday.

The annual report was issued by China Export and Credit Insurance Corporation, or Sinosure, China’s policy-oriented insurance company. Launched in 2005, the report has served as a reference for Chinese companies seeking to invest overseas.

Country risks have been generally increasing globally in 2019, the report said. Only three countries — Egypt, Japan, and Nigeria — have seen their risks for investment reduced from that of last year, while risks for 181 other countries have remained at a similar level. Eight countries, including Iran and Sudan, have experienced a rise in risks, according to the Sinosure ratings.

“Factors such as trade tensions between China and the United States, and UK’s exit from the European Union, have already resulted in the bankruptcy of an increasing number of companies,” said Wang Tingke, general manager of Sinosure.

He said that since the second half of 2018, investments risks have risen throughout the world due to rising unilateralism, trade tensions among major economic powers, rising populism and geopolitical uncertainties.

All these factors would directly drag down the development of the world economy, affect international market vitality and investors’ confidence, he said.

The International Monetary Fund also reduced its global growth outlook in July. The global economy is forecast to expand 3.2 percent this year and 3.5 percent next year, both down 0.1 percentage points from April projections, the IMF projects.

“With the further slowdown of the global economy, the survival of companies will be more difficult this year,” Wang said.

He said that commodity prices will remain low and retail enterprises, which are also affected by online shopping, will find it particularly difficult to survive.

Affected by trade frictions and sanctions, the global photovoltaic industry, telecommunication industry, and iron and steel industries will be under greater pressure too, he added.

A policy-oriented insurance company, Sinosure supports Chinese companies and their exports. Wang said that Sinosure provided insurance services to more than 110,000 Chinese enterprises from January to September this year, of which more than 70 percent are small enterprises.

Shu Wenbin, general manager of Continental Interior Design and Construction in Beijing, said that country risks would always be the most important factor to consider when a company is expanding business overseas.

Despite the current uncertainties, he said he still sees opportunities for his business in regions such as Africa.