(MENAFN- Asia Times) Stock markets in Hong Kong and mainland China slumped after Moody's downgraded its outlook on the Chinese government's credit ratings to“negative” from“stable” on Tuesday.
The Hang Seng Index, Hong Kong's stock market benchmark, fell 1.9% to close at 16,327 on Tuesday, the lowest since November 2022. The Shanghai Composite Index dropped 1.7% to 2,972, breaking the psychological support of 3,000 again since October this year.
Although Japan's Nikkei 225 also declined 1.37% on Tuesday due to investors' worries about the slowing economy in Asia, the index has increased 27.5% so far this year. The Hang Seng Index has fallen 19% while the Shanghai Composite Index has decreased 4.63% in 2023.
Moody's on Tuesday affirmed China's A1 long-term local and foreign-currency issuer ratings but it downgraded its outlook on China's government credit ratings to negative, citing the country's lower medium-term economic growth and ongoing downsizing of the property sector.
The change“reflects rising evidence that financial support will be provided by the government and wider public sector to financially stressed regional and local governments and state-owned enterprises,” Moody's said.
It said this trend was“posing broad downside risks to China's fiscal, economic and institutional strength.”
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