OREANDA-NEWS. China's utilities sector will encounter slow demand growth, with net additions to generation capacity, a rising share of volumes sold via lower-margin direct sales under China's new policy directive, and higher coal prices which will further compress the profitability of China's thermal electricity generators, says Fitch Ratings in our 2017 Outlook Report.

Capex requirements for electricity utilities - both generation and networks - will remain high in 2017; for generators, the added pressures on operating cash generation will result in weaker financial profiles.

The agency also highlights that regulatory reforms in China will continue, but in a gradual fashion and will have mixed implications for different parts of the value chain. Hong Kong utilities also face regulatory uncertainty until the terms of the next 10-year regulatory period are finalised; the current regulatory period expires in 2018.