Falling rates and bond yields may not be enough to brighten sentiment in Asia though, after Moody’s lowered the ‘outlook’ on China’s A1 debt rating to “negative”.
According to Moody’s, the amount of money Beijing likely needs to provide to support debt-laden local governments and state firms poses “broad downside risks to China’s fiscal, economic and institutional strength.”
Rival ratings agency S&P Global warned that growth could slow to below 3% next year if the country’s property crisis deepens further.
Growth that low in China is in many ways difficult to fathom. But if it is indeed on the looming horizon, it helps explain why foreign investors in China are pulling money out, and why those not already in China are reluctant to put their cash in.
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