Editorial | Moody’s downgrade provides incentive for Hong Kong to do even better
- Close ties with mainland China have led to the latest unflattering report card from the ratings agency, but city can prove it wrong
The glass is half empty, according to Moody’s, the international ratings agency. No, it’s actually half full, Hong Kong has countered.
Seasoned investors will have their own views, but the latest downgrade of the city’s credit outlook from stable to negative is more grist for the mill. The move was predictable once Moody’s cut its outlook for the mainland’s sovereign bonds to negative from stable, underscoring global concerns about the level of debt in the world’s second-largest economy.
However, Moody’s has retained a long-term rating of A1 on the bonds.
China’s fiscal stimulus to support local governments and reverse the property downturn are seen as risks to the economy. Close mainland ties have led to the latest unflattering report card on Hong Kong.
The ever closer integration with the mainland is an economic reality for the city. Some consider it in a negative light, but there are many upside benefits and advantages, not least are easy entry to the mainland economy and offshore access to the yuan.
Unfortunately, Moody’s preferred to accentuate the downside risks.