Hong Kong government responds to Moody’s change in credit outlook

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6th December 2023 – (Hong Kong) The Hong Kong Government has responded to Moody’s Investors Service’s decision to change the credit outlook of Hong Kong to “negative” from “stable,” while affirming the “Aa3” long-term issuer rating. The government expressed disagreement with Moody’s decision and highlighted Hong Kong’s significant credit strengths, fiscal buffers, and large foreign currency reserves, which provide the city with resilience and a substantial buffer to weather shocks.

The government emphasized that Hong Kong’s deepening and expanding economic and financial ties with mainland China should not be seen as a rating constraint but rather as a source of strength for the city’s long-term development. It noted that the mainland continues to be an important engine of global economic growth, with a projected growth rate of at least 5% this year, outpacing many other economies and contributing to over 30% of global growth according to the International Monetary Fund.

Regarding the comments made by Moody’s on the high-degree of autonomy of the Hong Kong Special Administrative Region, political and judicial institutions, the implementation of the National Security Law (NSL), and changes to the electoral system, the government reiterated the Central Authorities’ commitment to upholding the “one country, two systems” principle in the long run. It stressed that Hong Kong’s core strengths, including the common law system, rule of law, free flow of capital and information, and a business-friendly environment, will remain intact.

The government pointed out that the implementation of the NSL has restored stability, ended chaotic situations and serious violence, and increased confidence in Hong Kong. It highlighted that the city has resumed normal operations and swiftly returned to the path of development since its implementation. It cited facts such as the stable number of foreign companies in Hong Kong, the growth in deposits in the banking system, and Hong Kong’s role as a green and sustainable finance hub in Asia.

Regarding improvements made in Hong Kong’s electoral system, the government emphasized the implementation of the principle of “patriots administering Hong Kong” to ensure stability and development. It also highlighted Hong Kong’s strong financial markets, banking system, and the well-functioning Linked Exchange Rate System.

The government concluded by reaffirming the strengths of Hong Kong, which have withstood various tests over time and will continue to do so in the future.