Research — March 21, 2026
From Strait Blockage to Straight Losses: Credit Stress Pathways for Asian Listed Companies
Brent crude oil prices surged above $100 per barrel on March 9 and again on March 12, 2026, as escalating conflict in the Middle East disrupted shipping through the Strait of Hormuz — a critical chokepoint through which roughly one-fifth of the world’s oil supply passes each day, much of it destined for East and Southeast Asian markets. Despite record releases from strategic petroleum reserves on March 11, 20261, oil prices remain elevated as supply risks persist.
For major energy-importing economies across East and Southeast Asia, disruptions at the Strait of Hormuz can quickly translate into pressure on corporate profitability and gradually tighter credit conditions.
In this blog, we leverage S&P Global Market Intelligence’s Early Warning Signals (EWS) framework2, powered by the RiskGauge™ 3.0 model, to detect early signs of elevated default risk among listed non-financial corporates in the region3. This framework delivers timely warning signals through an intuitive traffic-light color scale. By comparing conditions in the six months preceding the recent escalation with the latest observations as of March 10, 2026, we assess how rising geopolitical tensions may already be affecting corporate credit risk in the region.
Figure 1: EWS Signal Trends Across Major Market Indices4 in East and Southeast Asia
Source: S&P Global Market Intelligence as of March 10, 2026. For illustrative purposes only.
As shown in Figure 1 above, while EWS signals across East and Southeast Asia remained broadly stable until January 2026, early signs of deterioration began to emerge in February amid rising geopolitical tensions and heightened market volatility. Across the major market indices in the region, green signals declined to 75% by March 10, while amber signals rose to 19%. Red signals remained broadly unchanged.
Taken together, these shifts suggest that the Hormuz disruption is beginning to transmit into corporate credit conditions across the region, although the deterioration remains at an early stage.
Looking beyond major indices, however, reveals that the impact is uneven across economies. Figure 2 compares the change in EWS amber and red signals between February 28 and March 10, 2026, roughly ten days after the escalation of conflict.
Figure 2: Changes in EWS Amber and Red Signals Across East and Southeast Asia (Feb 28 – Mar 10)
Source: S&P Global Market Intelligence as of March 10, 2026. For illustrative purposes only.
Southeast Asia records the largest increase in the percentage of amber signals, reflecting the region’s heavy reliance on energy imports and relatively limited fiscal buffers. South Korea follows and is the only market to see a modest increase in red signals (+0.9%), pointing to more acute credit stress in parts of its corporate sector. Taiwan also shows a notable rise in amber signals, consistent with its dependence on imported energy and energy-intensive manufacturing. The rise in amber signals alongside declining red signals in Southeast Asia and Taiwan reflects early-stage credit stress that has not yet escalated into high-risk territory.
By contrast, movements in Mainland China, Japan and Hong Kong remain more contained. For Mainland China and Japan, this likely reflects more diversified energy sourcing and relatively ample strategic reserves, while in Hong Kong, it may reflect lower direct exposure to energy price shocks given the relatively high weighting of financials.
Sector-level patterns also highlight where corporate balance sheets may be starting to come under pressure in East and Southeast Asia.
Figure 3. Sector-Level Changes in EWS Red Signals in East and Southeast Asia (Feb 28 – Mar 10)
Source: S&P Global Market Intelligence as of March 10, 2026. For illustrative purposes only.
The increase in high-risk firms is most pronounced in Airlines, Media, Aerospace & Defense, and Construction Materials — sectors that tend to be more cyclical or more exposed to rising energy costs and broader economic uncertainty. By contrast, EWS signals improved slightly in Information Technology and Utilities, likely reflecting the strong financial positions of large technology firms and the ability of regulated utilities to pass through higher costs.
The Hormuz disruption illustrates how geopolitical shocks can begin to transmit into corporate credit conditions across East and Southeast Asia well before credit deterioration becomes visible in financial statements or formal rating actions. By leveraging timely insights from S&P Global Market Intelligence’s EWS framework, market participants can better anticipate emerging risks and navigate today’s increasingly complex environment.
If you want to learn more about RiskGauge™ and EWS, please click here.