By Tyler Durden
Hong Kong’s Largest Mall Owner Cuts Rents Up To 50%
Commenting on the regional impact of the Covid-2019 epidemic, Morgan Stanley writes that Hong Kong’s tourism, trade and domestic consumption could be significantly affected, further aggravating the technical recession the financial hub found itself going into 2020.
Looking ahead, MS lays out two scenarios: should the outbreak peak in February/March with swift normalization of economic activity (Scenario 1), the bank estimates a 1-2% drag on 1Q GDP growth, meaning the recession started by Hong Kong’s protests will likely extend for one more quarter, but the impact could be larger at 2-4% if existing travel restrictions stay for longer and the production normalization process is slow in mainland China (Scenario 2). In the worst-case scenario 3, where the outbreak lasts for months, the impact on growth could reach 3-4.5% in 1H.
As such, Morgan Stanley remains cautious on the local stock market (the Hang Seng Index) and keeps MSCI HK Underweight given their sizeable revenue exposure to the local Hong Kong market (19% for Hang Seng and 50% for MSCI HK), and see greater near-term pressure for Banks and Retail than …read more
Source:: Zero Hedge