International ratings service provider Fitch sees no further pressure to downgrade Hong Kong’s credit rating despite growing concern over the US threat to revoke the city’s special economic and trade status in response to a proposed national security law for Hong Kong.
The agency said it believes Hong Kong’s high degree of autonomy and allure as a world-renowned financial hub will be retained.
It’s unlikely to exert further downward rating pressure insofar as we remain confident the territory will retain a high degree of autonomy over its most salient macro-institutional features
Andrew Fennell,
senior director of APAC sovereigns at Fitch Ratings
“The US signal of a possible change in its long-standing policy toward Hong Kong could heighten uncertainty and dampen investor sentiment,” said Andrew Fennell, senior director of APAC sovereigns at Fitch Ratings.
“But, it’s unlikely to exert further downward rating pressure insofar as we remain confident the territory will retain a high degree of autonomy over its most salient macro-institutional features, such as an independently managed currency, fiscal framework, financial regulatory bodies, and the foundations of its business environment,” he said.
READ MORE: Business sector: National security law a guarantee of HK's future
The 13th National People’s Congress, China’s top legislature, overwhelmingly approved a resolution to draft a national security law for Hong Kong at the close of its third session on Thursday.
The resolution came hours after US Secretary of State Mike Pompeo told Congress that Hong Kong no longer qualifies for its special status under US law.
Over the past nine months, Fitch has downgraded Hong Kong’s credit rating twice amid the protracted Sino-US trade tensions, the months-long citywide violent protests and the coronavirus pandemic.
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The first rating cut was in September last year — the first downgrade by Fitch since 1995. In April, the agency further downgraded Hong Kong’s sovereign credit rating from “AA” to “AA-” with a stable outlook and real GDP expected to fall by 5 percent.
Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor rejected the downgrades, reiterating that Hong Kong’s institutional strengths and core competitiveness remained unscathed.
