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S&P Downgrades Hong Kong's Ratings

S&P Downgrades Hong Kong's Ratings”

"When the gap between Hong Kong and the USA interest rate continues to widen, (the) Hong Kong dollar will weaken towards 7.85 (against USD)", said Hong Kong Monetary Authority (HKMA) acting chief executive Eddie Yue.

Hong Kong Monetary Authority (HKMA) acting chief executive Eddie Yue said that the Hong Kong dollar will likely weaken, as "the gap between Hong Kong and the US interest rate continues to widen", potentially triggering a capital outflow.

"We view a weakening of credit support for China as exerting a negative impact on the ratings on Hong Kong beyond what is implied by the territory's now strong credit metrics", the agency said in a statement.

Moody's also slashed its rating for Hong Kong in the same month from Aa1 to Aa2 citing the impact of credit trends in China on the city.

And given its expectations that real GDP growth in China will remain close to 6 percent annually in the next three years, S&P forecasts that Hong Kong will maintain higher per capita GDP growth than most other high-income economies.

These developments in aggregate are believed to help strengthen the ecosystem of Hong Kong's new economy and high growth sectors and the position of Hong Kong as a preferred listing and financing platform, he said.

It said Hong Kong has a good economic outlook, sizable fiscal reserves and credible monetary policy.

The Hong Kong dollar has been pegged at 7.8 to the USA dollar since 1983, but can trade between 7.75 and 7.85.



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