Hong Kong version of the National Security Law｜S&P says that if one country and two systems are lost, Hong Kong’s rating will be reviewed

Financial News

Written by: Zhang Weilun

2020-06-08 21:01

Chen Jinrong, senior director of the S&P Sovereign Rating Department of the investment rating agency, pointed out at an online conference that many events in the past year have had a negative impact on Hong Kong, but it is not enough to downgrade Hong Kong's credit rating and maintain the "AA+" credit rating. The outlook remains stable.

Chen Jinrong pointed out that "one country, two systems" is an important indicator of Hong Kong's rating. Hong Kong is under the jurisdiction of the SAR government, and Hong Kong is never regarded as a mainland government when rating, because Hong Kong's monetary policy is determined by the HKMA, an independent currency is linked to the US dollar, and the SAR government manages Reserves reflect that Hong Kong maintains financial independence. Even if the National Security Act of the port is enacted, the above factors will not change, so the rating will not be affected.

Since very few regional credit ratings can be higher than their sovereign states or jurisdictions, S&P believes that if "one country, two systems" cannot be maintained, it will re-examine Hong Kong's ratings.

Regarding the US plan to cancel Hong Kong’s special status, Chen Jinrong pointed out that the US’s restrictions on Hong Kong’s exports have little effect. Credit rating. S&P pointed out that there are a large number of jobs in Hong Kong related to financial activities. Once the scale of foreign capital investment is greater than expected, it will seriously hurt local employment.

S&P believes that if the political situation and society in Hong Kong continue to be unstable, it will have an impact on long-term economic development. It is expected that strong local productivity will disappear in the next 10 years. In addition to the fact that some foreign capital has been invested due to political turmoil, huge competition in the Mainland, de-globalization, and Sino-US friction, the growth rate of Hong Kong's workforce has continued to slow down and will decline by 2030.

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