Speculation of Moody’s China downgrade seen ahead of release in Chinese social media

Hours before Moody’s downgraded the outlook for China’s sovereign credit ratings on Tuesday, speculation that such a move was imminent was circulating on Chinese social media platform WeChat, a Reuters review shows.

“It is said that Moody’s will downgrade China’s sovereign credit rating, and an announcement will be made in the afternoon,” according to one WeChat post, in Chinese translated by Reuters, in a chat group with several hundred people.

Moody’s on Tuesday cut China’s government outlook to negative from stable, stopping short of an outright downgrade. The rating agency cited growing evidence that authorities will have to step in to support debt-laden local governments and state firms, a move that could pose risks to the country’s fiscal, economic and institutional strength.

China’s blue-chip stocks slumped to nearly five-year lows on Tuesday amid worries about the country’s growth, with talk of a possible cut by Moody’s denting sentiment during the session, ahead of the release.

Spokespeople for Moody’s didn’t immediately respond to a Reuters request for comment.

(Writing by Chibuike Oguh in New York; editing by Megan Davies and Nick Zieminski)