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Hong Kong’s role in global finance remains intact despite months of protests: Fitch

Although social unrest is undermining perceptions that city is a stable international business hub.
A demonstrator wears a gas mask and an 'anonymous masks', also known as a Guy Fawkes mask, during a protest in Admiralty district of Hong Kong on Sunday, October 6, 2019. Image: Kyle Lam/Bloomberg

Hong Kong’s role in global finance is intact, with little evidence to suggest recent protests and social unrest in the city have adversely impacted that role, global credit rating agency Fitch Ratings said on Thursday.

However, the rating agency added that the prolonged protests are undermining perceptions that Hong Kong is a stable international business hub and that a weaker view of its governance could impact its credit rating directly.

The Chinese-ruled city has seen more than six months of anti-government demonstrations sparked by a controversial and now-withdrawn extradition bill. The often violent protests have morphed into calls for greater democratic freedoms and an end to alleged mainland Chinese meddling in the semi-autonomous former British colony.

In September, Fitch had downgraded Hong Kong’s long-term foreign currency issuer default rating to “AA” from “AA+” following months of protests.

The latest protests began in March amid fears that Beijing is eroding the autonomy granted to Hong Kong when it was handed back to China in 1997. China has denied the charge of meddling and said Hong Kong is an internal affair.

Fitch said on Thursday that while Hong Kong’s short-term outlook continues to deteriorate, the medium-term prospects seem more positive. The economy has sunk into its first recession in a decade, with businesses under pressure from the protests and protracted US-China trade war.

The rating agency added that the recent listing of Alibaba Group on the Hong Kong stock exchange portrays Hong Kong’s role as the “flagship off-shore financing centre” for Chinese companies.

Commenting on a recent US legislation supporting protesters, which has angered China, Fitch said that it was largely symbolic but shows that changing international perceptions of Hong Kong could have economic spill-overs.

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