Moody’s warning that Hong Kong’s high credit rating may be at risk is premature

Being the odd man out is not usually a good thing. Of the big three credit rating companies, only Moody’s has warned Hong Kong’s high rating may be imperiled in the months ahead because of potential filibustering and other delaying tactics by an influx of new anti-establishment lawmakers into the legislature. Fitch and Standard & Poor’s have remained confident. Policymaking, according to Moody’s, may be bogged down in the new legislature. Its conclusion is premature. Finance minister John Tsang Chun-wah says the assessment is “unfair”.

The new lawmakers have yet to start their job. No one knows how they will behave. Even if they take obstructionism to a new level, it’s still difficult to predict what impact they may have on the government’s economic policy and on the overall economy.

With more than HK$840 billion in reserves along with other massive government assets, the city’s financial health and credit worthiness are not in doubt. The government’s ability to pass its annual budget has been maintained. That means it is still firmly in control of fiscal policies, despite the political infighting.

Still, Moody’s warning reflects the concerns of many foreign diplomats and investors about the direction the city is taking. The business of Hong Kong has been business. Now, it appears for some lawmakers and their supporters, its business is politicking.

Chief Executive Leung Chun-ying has warned that the delaying tactics in Legco have had an adverse impact on local economic development. There are signs that after years of indiscriminate filibustering, many Hong Kong people are sick and tired of Legco’s obstructionism. Tensions between the legislature and the executive branch remain a serious problem. With the coming of localist lawmakers, things are likely to get worse before they get better. It all comes back to whether the new Legco and the government can figure out a workable relationship instead of constant confrontations. The local public and foreign investors have the right to expect more constructive engagement between the two branches of government.