Moody's Downgrades Hong Kong's Credit Outlook

Ratings agency, Moody's, has downgraded Hong Kong's credit outlook, citing the city's unrest. It follows a similar move by another agency, Fitch, earlier this month.

Moody's downgraded Hong Kong's credit outlook from stable to negative, but affirmed its credit rating at Aa2 - the third highest on its scale.

The agency says the downgrade reflects the rising risk that the ongoing protests reveal an erosion of Hong Kong's institutions and undermine the city's credit fundamentals by damaging its attractiveness as a trade and financial hub.

Moody's says the stalemate between the authorities and protesters here has increased the downside risks to Hong Kong's economy and institutions.

The agency has also warned that it would likely cut the credit rating in future if the protests, or measures taken by the government to resolve them, damage Hong Kong's medium-term economic prospects or signify an erosion in its institutions.

In response, the Financial Secretary Paul Chan dismissed Moody's decision. He called the rationale behind it "groundless".

Mr Chan said Hong Kong is still the world's best place to do business, and its competitive edge has not been affected by the unrest.

On September 5, Fitch downgraded Hong Kong's rating by one notch to AA, also its third highest rating, and cut its outlook on the SAR to negative.

______________________________