HONG KONG (Reuters) - S&P maintained Hong Kong’s AA+ credit rating with a stable outlook on Tuesday despite increasingly violent anti-government protests, breaking with the other two big global credit rating agencies.
The Chinese-ruled city’s “strong economic and financial metrics will allow the government’s credit standing to withstand the fallout from the ongoing social unrest,” S&P Global Ratings said in a news release.
Growing violence on Hong Kong’s streets has added to pressure on the open economy from the protracted U.S.-China trade war, prompting Fitch Ratings to cut the city’s rating by a notch last month to AA, while Moody’s switched its outlook to negative from stable but kept its Aa2 rating.
Many analysts believe the city, one of the world’s most important trade and business hubs, has slid into its first recession in a decade. Tourism and retail sales have plummeted, threatening heavy job losses.
S&P said near-term economic growth will be muted, but added that short-term stimulus measures will be implemented to support the flagging economy, with the government incurring fiscal deficits in the next one to two years.
However, “abrupt changes” in Hong Kong’s relationship with the Chinese central government could sour this outlook, S&P said.
Hong Kong is governed under the ‘One Country, Two Systems’ arrangement where the territory keeps its way of life upon returning to Chinese rule in 1997. Its autonomy, however, has been in doubt amid concerns over Beijing’s growing influence.
Reporting by Noah Sin; Editing by Kim Coghill