[TOKYO] BlackRock Inc is reducing its investment in Hong Kong, betting the city's equity and property markets will trail other Asian countries as growth slows in the world's two biggest economies.

Hong Kong stocks may underperform as the US pares stimulus and China tightens credit, said Andrew Swan, head of Asian equities at BlackRock, which managed US$3.86 trillion as at June 30. Home values in the city may fall more than 10 per cent into 2014 amid government measures to curb prices and rising US interest rates, he said.

"Hong Kong is in a challenging position at the moment," Mr Swan said on Oct 10, adding that the firm had sold shares of companies based there in the last 12 months. "You've had very strong liquidity as China leveraged up and you've had very low cost of credit because of the currency situation. Now both of those things are changing."