Foreign banks are cutting their China forecasts further after the property sector revealed even more signs of distress.
"Property contagion concerns are rising," Goldman Sachs said as it lowered its outlook for Chinese share performance. "The pressures have recently percolated to the financial economy," it added, pointing to missed payments by developer Country Garden on two dollar-denominated bonds and by Zhongzhi Group, one of China's largest trust companies, on dozens of financial products.
UBS cut its forecast for China's gross domestic product growth to 4.8% for 2023 and 4.2% for 2024 from 5.2% and 5%. "Much of the downgrade is driven by a reassessment of property sector development and implications for other parts of the economy," Wang Tao, its chief China economist, said in the report.
UBS expects a 25% decline in new property sales for the year, compared to its earlier forecast of a "mid-single-digit decline."
Nomura, Morgan Stanley and Barclays earlier cut their China GDP forecasts following weak macroeconomic data for July, citing concerns over the sluggish property market recovery.
The latest round of outlook cuts comes after a string of bad news concerning Hong Kong-listed developers.