Rating agency Moody’s (MCO.NYSE) downgraded its outlook on China’s property sector from stable to negative, on concerns that liquidity tightening will trigger a slowdown over the next 18 months, MarketWatch reported. “The market now faces a cooling period” due to stricter measures on property purchases unveiled by the State Council in January, Hong Kong-based analysts wrote in the report. Moody’s said it expects a “mild downward” correction in property prices in China’s first- and second-tier cities, but didn’t provide specific forecasts on the size of the expected price drop. Earlier this week, Fitch Ratings issued a negative outlook on China’s long-term local currency default rating, saying that it expected the government to have to provide some support to state-owned banks, the Wall Street Journal reported. The agency added that rising real estate valuations and inflation add to the risks of macro-financial stability.
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