Ratings agency Fitch downgrades Hong Kong to ‘AA’ amid negative outlook

The downgrade comes as Hong Kong has recently witnessed months of unrest. (File photo: Reuters)

Global ratings agency Fitch downgraded Hong Kong from AA+ to AA on Friday, citing a more challenging economic landscape as a result of continued unrest.

Fitch downgraded the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) and also signaled a negative outlook for the IDR of Asian economy.

The ratings agency forecast real GDP growth of 0 percent in 2019, implying an outright contraction during second half of this year, and 1.2 percent in 2020.

Fitch also that it expects Hong Kong’s budget surplus to narrow to roughly zero this year, in light of recently announced fiscal support measures.

However, it added that it expects the economy’s “considerable financial buffers” to nevertheless remain intact. It also said that Hong Kong continues to be supported by its credit profile, which includes a strong record of public-finance management, high income levels, and its resilient and flexible economy.

Hong Kong has recently witnessed months of unrest triggered by an extradition bill which would have allowed criminal suspects to be sent to mainland China for trial. The massive but peaceful protests became increasingly violent as the demands evolved into a wider call for democracy.

Leader Carrie Lam announced the withdrawal of the bill on Thursday, but protests are expected to continue.

This downgrade comes despite Hong Kong stocks extending gains on Friday morning, ending the morning on a positive note as global markets were lifted by fresh hopes for China-US trade talks.

The Hang Seng Index rose 0.59, or 157.07 points, to 26,672.60 by lunch.

Last Update: Wednesday, 20 May 2020 KSA 10:00 - GMT 07:00