---
title: "Hong Kong Banks Slump After Morgan Stanley Downgrades Outlook"
description: "Hong Kong banks declined after Morgan Stanley cut the sector’s outlook, saying that the stocks will underperform as a slowing economy and falling rates hurt profitability."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Business Maverick"
author: "Bloomberg"
author_url: "https://www.dailymaverick.co.za/author/bloomberg/"
canonical_url: "https://www.dailymaverick.co.za/article/2019-10-09-hong-kong-banks-slump-after-morgan-stanley-downgrades-outlook/"
published: "2019-10-09T05:29:37"
lang: "en-ZA"
word_count: 153
---

# Hong Kong Banks Slump After Morgan Stanley Downgrades Outlook

> Hong Kong banks declined after Morgan Stanley cut the sector’s outlook, saying that the stocks will underperform as a slowing economy and falling rates hurt profitability.

By Bloomberg · Published 9 October 2019, 07:29 SAST

## Content

Bank of East Asia Ltd. slumped 3.3% as of 11:03 a.m. local time while Hang Seng Bank Ltd. dropped 3.2%. Morgan Stanley reduced its recommendation on the industry to cautious from in-line. It cut Hang Seng Bank and HSBC Holdings Plc to underweight.

“We would continue to avoid the segment,“ analysts including Anil Agarwal wrote in a note. “The economy is slowing fairly quickly in Hong Kong, with almost all key indicators meaningfully down year on year. This will pressure earnings in the second half and beyond.”

Falling local interest rates will further cloud the outlook, the brokerage said.

While banks are trading below long-term averages, they may continue to derate, similar to what’s happened in other markets including China and South Korea, according to Morgan Stanley. Local lenders may also face competition in the future from virtual banks, it said.

Standard Chartered Plc slid 1.8% in Hong Kong, while HSBC dipped 0.4%.