Fitch cut hits Hong Kong’s reputation

● Hong Kong’s reputation as a dependable financial hub took a hit on Friday when Fitch downgraded the city’s sovereign rating, citing continuing protests and uncertainty caused by closer integration with the Chinese mainland.

Millions of pro-democracy supporters have taken to Hong Kong’s streets for the past three months in the biggest challenge to China’s rule since the city’s handover from Britain in 1997.

The sometimes violent protests have heaped pressure on Hong Kong’s economy, already under strain from the US-China trade war.

In a statement on Friday, Fitch announced it was downgrading the city as an issuer of long-term foreign currency debt from an AA+ rating to AA with a negative outlook.

Bloomberg reported that it is the first time the credit rating agency has made such a move since 1995, when uncertainty had spiked over Hong Kong’s handover to China.

“Ongoing events have … inflicted longlasting damage to international perceptions of the quality and effectiveness of Hong Kong’s governance system and rule of law, and have called into question the stability and dynamism of its business environment,” Fitch said.

“The gradual rise in Hong Kong’s economic, financial, and sociopolitical linkages with the mainland implies its continued integration into China’s national governance system, which will present greater institutional and regulatory challenges over time.”

Hong Kong’s Hang Seng index brushed off the news, ending Friday 0.66% higher.

The Hong Kong government has run fullpage advertisements in some major overseas newspapers in a bid to reassure international business about the city’s financial and political stability. — AFP