Financial Secretary John Tsang is putting up a vigorous defense of Hong Kong after Moody’s gave it a “negative” outlook from “stable”.
The rating agency downgraded Hong Kong for the first time since 1998, citing its closer political ties with mainland China, the Hong Kong Economic Journal reports.
However, it maintained Hong Kong Kong’s long-term sovereign credit rating and issuer rating at “Aa1″.
The downgrade is “hardly comprehensible or agreeable” given the “one country, two systems” principle which governs Hong Kong’s relationship with the mainland and allows it to operate as a separate political and economic entity, Tsang wrote on his blog Sunday.
He said that relationship exposes Hong Kong to opportunities, not risks.
Moody’s said rising political tensions over next year’s chief executive election will undermine the effectiveness of government policies.
Also, it said Hong Kong lenders are facing higher credit risk given increased lending to mainland companies amid an economic slowdown and a potential fall in property prices in the mainland.
Moody’s cuts China outlook and affirms rating (March 3, 2016)
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