Hong Kong: The next financial domino?

Bloomberg reported that Carmen Reinhart had a chilling warning about Hong Kong:

Hong Kong’s rolling political turmoil could prove a tipping point for the world economy, Harvard University economist Carmen Reinhart said.

Noting an incidence of shocks that have rattled global growth, including the intensifying U.S.-China trade war, Reinhart cited Hong Kong as among her main concerns. Having previously warned that Hong Kong faces a housing bubble, she said the world economy could be hit by “shocks with a bang or with a whisper.”

“One shock that is concerning me a great deal at the moment is the turmoil in Hong Kong,” which could impact growth in China and Asia generally, Reinhart said in an interview with Bloomberg Television’s Kathleen Hays.

“These are not segmented regional effects, these have really global consequences. So what could be a tipping point that could trigger a very significant global slowdown, or even recession -- that would be a candidate, that could be a candidate,” said Reinhart, who specializes in international finance.

Indeed, the unrest has taken a toll on the local economy.

...and GDP growth expectations are tanking.

Let me calm everyone down, and you can timestamp this forecast. China will not send the troops into Hong Kong in 2019, which reduces tail-risk. At the same time, however, investors should not ignore Carmen Reinhart's warnings either.

The full post can be found here.