What’s moving markets today: July 31, 2019

Hong Kong has released preliminary official data showing what it called “subdued” economic performance in the second quarter.

According to figures released Wednesday, the city’s GDP fell by 0.3% compared to the previous quarter, while it grew by 0.6% compared to the same period last year — significantly weaker than analysts had expected.

Hong Kong has been facing increased volatility lately as mass protests engulf the city for more than eight consecutive weeks.

Reacting to the data Wednesday, Julian Evans-Pritchard, a senior China economist at Capital Economics, wrote in an analyst note:

While it may be tempting to pin this on the recent protests, we are skeptical that they have been the main driver.
Consumption growth which, if anything, should have been worse hit by the protests, picked up last quarter.” 

The ongoing slowdown from the US-China trade war appears to be a bigger drag on growth than the recent rallies, and this “looks set to intensify,” Pritchard added.

“We expect growth in the city to remain weak.”

Analysts at Fitch Ratings warned that “disruptions to economic activity from recurring protests in Hong Kong present a downside risk to our GDP growth forecasts.”

But for now, any effect from the demonstrations “are unlikely to undermine the territory’s considerable financial buffers in the near term,” they wrote in a note Tuesday.

A government spokesperson said that officials would “monitor the situation closely.”

This article originally appeared here