Moody's drops HK a notch, blames weak government - RTHK
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Moody's drops HK a notch, blames weak government

2020-01-20 HKT 22:47
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  • The ratings agency  described the government's response to protesters demands "slow, tentative and inconclusive". File photo: RTHK
    The ratings agency described the government's response to protesters demands "slow, tentative and inconclusive". File photo: RTHK
The ratings agency Moody's has downgraded its assessment of Hong Kong blaming a lack of government response to months of popular protests and Beijing's increased influence over the city's institutions.

It cut the key long-term issuer and senior unsecured ratings one notch from Aa2 to Aa3. The firm says the absence of plans to address protesters' concerns may show that the government has a weakness in setting and achieving social and economic goals.

It described the government's response to demands for greater political freedoms - and sky-high living costs - as "notably slow, tentative and inconclusive".

"It may also point to more significant constraints on the autonomy of Hong Kong's institutions than previously thought," the agency added, in a nod to pressure from Beijing.

The rating downgrade represents a blow to the Chief Executive, Carrie Lam, who has struggled to end the more than seven months of huge and increasingly violent pro-democracy protests.

The unrest has upended Hong Kong's reputation for stability, while the protests present the most severe challenge to Beijing's rule since the former British colony's 1997 handover to China.

But the agency also lifted its outlook from negative to stable, attributing the decision to the Hong Kong's financial strength and consistent macroeconomic stability.

It says it expects Hong Kong to persist through a period of heightened political and social uncertainty coupled with lacklustre economic growth.

The government issued a statement expressing deep disappointment at the downgrade, saying Moody's does not have enough reasons to question Hong Kong's high degree of autonomy as enshrined in the Basic Law.

It says the agency's rating is not in line with Hong Kong's sound fundamentals such as an intact currency peg, a sound banking system, a robust financial market and a massive financial reserves. (Additional reporting by AFP)