Asian stocks traded higher on Wednesday, unfazed by a rating downgrade to China by Fitch which triggered a mild domestic sell-off but which analysts said did not take into account the economy’s future performance.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7%, after U.S. stocks ended the previous session with mild gains. The index is up 0.2% so far this month.
The yield on benchmark 10-year Treasury notes was at 4.3556% compared with its U.S. close of 4.366% on Tuesday. The two-year yield , which rises with traders’ expectations of higher Fed fund rates, touched 4.7384% compared with a U.S. close of 4.747%.
Fitch affirmed China’s sovereign rating at ‘A+’ even though the outlook was downgraded to negative and it forecast economic growth this year would slow.
“These downgrades reflect mostly the current cyclical situation in China, they are not forward looking. This means that as and when China’s economy improves, they will change their rating outlook to positive,” said Chi Lo, BNP Paribas Asset Management senior strategist. He added the Fitch move followed a similar call by Moody’s in December.
China’s blue chip CSI300 index was down 0.43% after earlier opening flat while the Shanghai Composite was down 0.34%. Hong Kong’s Hang Seng Index escaped the selling and was trading up 1.88%.
Source: Reuters
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