Don’t worry about Hong Kong’s credit rating downgrade, finance chief says
Hong Kong’s finance minister said on Saturday that he disagreed with the lowering of the city’s credit rating by US rating agency Standard & Poor’s.
The comment by Financial Secretary Paul Chan Mo-po came a day after the downgrade to AA+ from AAA, a move which is expected to raise financing costs for local businesses.
Standard & Poor’s said the rating cut for Hong Kong was related to its decision to downgrade China’s rating a day earlier.
Speaking after a public event, Chan gave reassurance and said people should not worry about the adjustment.
“Of course we do not agree with the downgrading, nor do we think this will affect our economy or even long-term prospects, so we believe we do not need to worry about this,” Chan said.
He said that the developments in mainland China had provided many opportunities, such as mainland companies being listed in Hong Kong, boosting the city’s finance sector.
Chan said the city had also been doing well in risk management.
For example, he said, about 70 per cent of the banking system’s mainland-related dealings were with state-owned or big corporations, which were low-risk transactions.
“Although there have been concerns raised over financial risks related to loans to mainland companies, in practice, we think banks and our administrative system have been managing risks effectively over the past period, so we really do not need to worry,” he said.
Chan added that Hong Kong’s international legal and business systems, as well as its administrative transparency, differentiated the city from the mainland.
In an email on Friday, Standard & Poor’s said that its decision to cut Hong Kong’s rating was related to China.
“Strong institutional and political ties exist between China and Hong Kong, arising from the latter’s status as a special administrative region of China,” the agency said.
It added it was “lowering the rating on Hong Kong to reflect potential spillover risks”, referring to disruptions from debt level reductions in mainland China.