Standard & Poor’s said it has maintained Hong Kong’s AAA credit rating with a stable outlook, but warns it could be lowered if political polarization in the city worsened, RTHK said on Wednesday, citing the agency’s latest report on the special administrative region.
The financial services company said political polarization resulting from the electoral reform issue may delay policy decisions at the Legislative Council, but given the stable record of the Hong Kong government and the pragmatism of politicians, it does not expect the intramurals to affect the city’s governance efficiency.
But if polarization deteriorates, compromising the business environment and policy decisions, the rating agency may have to cut Hong Kong’s credit rating, the report said.
It also said external risk could heighten if volatility in global financial markets increases sharply. A downgrade of China could also lower the city’s credit rating.
The National People’s Congress is expected to announce a decision on Hong Kong’s electoral reform next week. While Beijing is expected to take a very conservative stance on the issue, the pan-democratic camp demands public nomination of candidates to the 2017 chief executive election.
Joseph Wong Wing-ping, a former civil service bureau chief, said S&P’s warning should remind the Hong Kong and central governments that their confrontational attitude has only worsened the situation, Apple Daily reported.
“I haven’t seen any good sign in recent moves on political reform, nor have I seen a proposal that is acceptable to all parties,” he said.
Sin Chung-kai, a member of the Legislative Council, said a lower credit rating would raise the borrowing costs for Hong Kong enterprises while affecting the local economy. If Hong Kong’s rating is downgraded, Chief Executive Leung Chun-ying and the pro-establishment camp should take the blame as they have been calling on the people to protest against Occupy Central.
S&P expects Hong Kong’s per capita GDP to reach US$40,500 this year, and the SAR government will continue its prudent fiscal policy despite its substantial reserves.
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