S&P lowers Hong Kong view to negative

Standard & Poor’s said it revised the outlook on Hong Kong (Special Administrative Region) to negative from stable.

The agency also said it affirmed the country’s AAA long-term and A-1+ short-term issuer credit ratings.

In line with this, S&P said it affirmed the long-term Greater China regional scale ratings at cnAAA and short-term Greater China regional scale ratings at cnA-1+.

The outlook revision reflects a similar action on the People’s Republic of China, reflecting economic imbalances in China that are unlikely to diminish at a pace previously expected, the agency said.

S&P said it believes Hong Kong and China have a high degree of financial and economic linkage.

Hong Kong’s institutions and policies support an open and free economy with a generally predictable and effective policy framework and strong economic transparency, the agency said.

The ratings also reflect above-average economic growth prospects for a high-income economy, healthy fiscal performance, sizable fiscal reserves, strong external position and the credibility of monetary policy, S&P said.

But the credit standing of Hong Kong can be completely disconnected from that of the mainland, given financial and economic linkages and the ultimate sovereign authority of China, the agency added.

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