Fitch Ratings, an international credit rating agency, announced on the 6th that Hong Kong’s sovereign credit rating has changed from “AA+” to “AA” because of the recent social unrest in Hong Kong, and the rating outlook has changed from “stable” to “negative”. . This is the first time that Fitch has lowered its credit rating on Hong Kong since the reunification of Hong Kong. It is also the first time that a rating agency has lowered its rating on Hong Kong after the recent “anti-revision” demonstrations in Hong Kong. The Chief Executive of the Hong Kong Special Administrative Region, Mrs Lam, said on the 6th that he did not agree with Fitch’s practice of lowering Hong Kong’s rating. She said that the events in the past few months have not weakened “one country, two systems”, and the future government will still insist on using the rule of law to stop the violence.
The US “Wall Street Journal” said on the 6th that Fitch said in a press release issued on the same day that Hong Kong’s continuous conflicts and violence in the past month are testing the “one country, two systems” structure, giving the international community views on Hong Kong’s governance system and the rule of law and efficiency. The long-term damage caused the stability and vitality of Hong Kong’s business environment to be questioned. And turning Hong Kong’s rating outlook to “negative” means that there is still the possibility of downgrading in the future. Fitch said that if there is another social riot in Hong Kong, it may further weaken the confidence of the outside world.
Fitch also said on the 6th that the agency expects Hong Kong’s economy to grow at zero this year. The Wall Street Journal said that this statement implies that Hong Kong’s economy will shrink in the second half of this year. The data shows that the Hong Kong economy grew by 0.5% year-on-year in the second quarter, with an increase of 0.6% in the first quarter. However, Fitch believes that Hong Kong has a financial buffer including huge foreign exchange reserves. The Hong Kong Government has sufficient resources to maintain the linked exchange rate system in which the Hong Kong dollar is pegged to the US dollar.
Hong Kong’s Ming Pao website reported on the 6th that Lin Zhengyue, who is attending the Pan-Pearl River Delta Regional Cooperation Executive Heads Joint Meeting in Guangxi, told reporters that he did not agree with Fitch’s practice. She said that continued violence will affect the perception of foreign countries and the confidence of enterprises in Hong Kong. It will also affect Hong Kong’s image as an international city and a good business environment. However, the Hong Kong Government will adhere to the principle of “one country, two systems” and use the rule of law to stop the violence. This is the biggest principle.
On the 6th, Fitch said that the economic, financial and socio-political links between Hong Kong and the Mainland are gradually deepening. “It shows that Hong Kong is continuously integrating into the Mainland’s governance system, which may bring institutional and governance challenges to Hong Kong in the long run.” The Financial Secretary of Hong Kong, Chen Maobo, said on the 6th that Fitch’s comments were purely speculative and lacked ground support. He said that the increasingly close economic and financial links between Hong Kong and the Mainland should not be a constraint on Hong Kong’s credit rating. On the contrary, this is a positive driving force for Hong Kong’s long-term development.
The Hong Kong community is very concerned about the downgrade. According to Hong Kong’s “Economic Daily” report, the Chairman of the Executive Committee of the Hong Kong Real Estate Developers Association, Liang Zhijian, said on the 6th that the downgrade will bring hidden worries to Hong Kong businessmen’s business, and it is more difficult to raise funds. I hope that the society will resume calm as soon as possible. Hong Kong’s chief economist Deng Shi’an said on the 6th that the downgrade has indicated that social events in the past few months have caused considerable shocks to the business environment in Hong Kong. The most direct impact on Hong Kong is the rising cost of financing related to Hong Kong. I believe the future of Hong Kong It takes a lot of effort to restore the reputation.