Morgan Stanley cuts HK's GDP growth forecast

Business | 21 Oct 2019 1:38 pm

Morgan Stanley cut Hong Kong's 2019 real GDP forecast to a negative growth of 0.8 percent from a drop of 0.3 percent, citing weaker-than-expected economic performance in the past two months.

The investment bank meanwhile expects the city's economy to decline 2 percent year-on-year in the second half, the lowest since 2009. However, the GDP is projected to grow by 0.8 percent next year, supported by the government's stimulus measures.

Morgan Stanley maintains a cautious outlook on Hong Kong real estate and equity sectors. It holds underweight in the MSCI Hong Kong Index, favors telecommunications and insurance sectors but is underweight financial and industrial stocks.

It keeps its first-quarter home price projection of a 10 percent decline from June peak, although it believes the latest policy address could boost secondary market transaction volume. In terms of the office market, it estimates the office rents would fall up to 10 percent in the next 12 months, given a lower economic growth.

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