Stocks in Hong Kong led losses regionally among major Asian markets on Tuesday morning after ratings agency Moody’s cut its rating for the city to Aa3 from Aa2 on Monday.
The Hang Seng index in the embattled city fell 1.79% in morning trade, with shares of life insurer AIA plunging about 3%.
The moves came following the ratings downgrade from Moody’s on Monday, where the agency also changed its outlook for Hong Kong to stable from negative. The city has been plagued by months of protests that have periodically degenerated into violence, with seemingly no resolution in sight.
“The downgrade principally reflects Moody’s view that Hong Kong’s Institutions and Governance Strength is lower than previously estimated,” the ratings agency said in a statement.
Still, one economist told CNBC on Tuesday that the downgrade “probably isn’t a big thing.”
“How much of this is actually gonna have an impact on the real activity? Probably not a lot,” Sian Fenner, lead Asia economist at Oxford Economics told CNBC’s “Street Signs” on Tuesday.
Meanwhile, mainland Chinese stocks also declined. Both the Shanghai composite and Shenzhen component fell about 0.9% each while the Shenzhen composite shed 0.702%.
Elsewhere, the Nikkei 225 in Japan was 0.84% lower while the Topix index declined 0.58%. In South Korea, the Kospi was 0.55% lower.
The Bank of Japan is set to release its quarterly outlook report at around 11:00 a.m. HK/SIN, which could provide clues regarding the direction of the central bank’s monetary policy. The BoJ will also announce its interest rate decision, which is widely expected to remain unchanged.
Shares in Australia also dipped, with the S&P/ASX 200 declining 0.44%.
Overall, the MSCI Asia ex-Japan index traded 0.9% lower.
The International Monetary Fund (IMF) said Monday that the global economic outlook “remains sluggish” as it trimmed its growth forecasts for 2019 and 2020 to 2.9% and 3.3%, respectively.
“The projected recovery for global growth remains uncertain. It continues to rely on recoveries in stressed and underperforming emerging market economies, as growth in advanced economies stabilizes at close to current levels,” IMF Chief Economist Gita Gopinath said in a written statement.
Markets stateside were closed on Monday for a holiday.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.618 after seeing earlier highs above 97.7.
The Japanese yen traded at 109.94 against the dollar after touching an earlier low of 110.21. The Australian dollar changed hands at $0.6859 after recovering from lows below $0.687 yesterday.
Oil prices were mixed in the morning of Asian trading hours. The international benchmark Brent crude futures contract slipped 0.2% to $65.07 per barrel while U.S. crude futures added 0.1% to $58.60 per barrel.
Here’s what’s on tap in the day ahead:
- Japan: Bank of Japan’s quarterly outlook report, interest rate decision at 11:00 a.m. HK/SIN
- Hong Kong: Consumer Price Index for December at 4:30 p.m. HK/SIN
