Pitch Downgraded to AA- Credit Rating in Hong Kong... "Impact of COVID-19"

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Global credit rating agency Fitch has downgraded Hong Kong's credit rating to AA-. The downgrade reflects the prolonged social unrest caused by protests and the economic shock triggered by the novel coronavirus infection (COVID-19).

According to Bloomberg on the 20th (local time), Fitch lowered Hong Kong's credit rating one notch from 'AA' to 'AA-' and maintained a 'stable' outlook.

Fitch explained, "Hong Kong experienced prolonged social unrest last year, followed by a second shock this year due to the spread of COVID-19." While efforts to contain the spread of COVID-19 are ongoing, considering Hong Kong's status as an open economy, negative risks remain. Fitch expects Hong Kong's economy to contract by about 5% this year, expanding the 1.2% decline seen last year.

Earlier, in September last year during the height of the Hong Kong democracy protests, Fitch downgraded Hong Kong's credit rating from AA+ to AA and assigned a 'negative' outlook. At that time, Fitch cited the loosening of the "one country, two systems" governance framework, which reduced Hong Kong's distinctiveness from China, as the reason for the downgrade.

The Hong Kong government expressed "disappointment" over Fitch's credit rating downgrade.

In a statement issued immediately after the rating announcement, the Hong Kong government said, "This rating decision highlights social issues without properly recognizing the solid fundamentals supporting the regional economy and financial markets." It added, "The view that Hong Kong's strengthening economic and financial ties with mainland China negatively affect the credit rating decision is unfounded. On the contrary, Hong Kong is positioned to benefit from the strong economic growth of mainland China."

Meanwhile, as the number of new COVID-19 cases in Hong Kong recently dropped to 'zero' and the situation entered a calm phase, large-scale protest movements have begun to reemerge.

After Hong Kong police arrested numerous pro-democracy figures last year on charges related to the opposition against the 'Fugitive Offenders Ordinance' (extradition bill), Hong Kong's civil society groups have announced plans for large-scale protests. The Civil Human Rights Front, which has led major protests in Hong Kong, condemned the police arrests of democratic figures and announced plans to hold a large rally on July 1, the anniversary of Hong Kong's sovereignty handover.

This content was produced with the assistance of AI translation services.