China biggest threat to region’s growth

CHINA’S “hard landing” may be the biggest threat to the Asia-Pacific region’s growth in the coming year, with investors worried over problems in the world’s second-largest economy possibly derailing its neighbors’ trajectories.

Slowing growth in China—linked to its problematic banking sector and the government’s desire to shift reliance to domestic demand—poses a threat to economies in the region, which all have significant trade linkages with the Asian giant.

“China’s growth outlook continues to dominate market concerns,” Moody’s said in a report released Monday.

Worries over China’s growth replaced geopolitical issues that were cited as the main concern for investors in the previous survey that was conducted late last year.

Moody’s conducted polls in Singapore and Hong Kong, the region’s two main financial hubs, to determine what investors were most concerned about in the coming months. About half or 49 percent of those polled in Singapore cited China’s slowdown as the chief concern, while 39 percent in Hong Kong listed the same.

Investors said China’s economy faced several headwinds, chief among them a prolonged downturn in the mainland’s property sector. Rising corporate debt, shadow banking and weaker-than-expected global demand may also put a drag on China’s and, by extension, the Asia Pacific region’s growth.

Outside of China, other issues cited by investors were uncertainty in the euro area, monetary tightening in the United States, geopolitical risks and volatility in fuel prices.