Fitch, S&P say no immediate impact on Hong Kong's ratings from unrest

Reuters

HONG KONG (Reuters) - Clashes between Hong Kong police and pro-democracy supporters won't significantly affect the city's credit ratings in the short term unless they last long enough to have a material impact on the economy, Fitch and Standard & Poor's (S&P) said on Monday. Fitch has a rating of "AA-plus" with a stable outlook while S&P has rated the former British colony a notch higher having assigned it the highest AAA-rating. "It would be negative if the protests are on a wide enough scale and last long enough to have a material effect on the economy or financial stability, but we don't currently see this as very likely," said Andrew Colquhoun, head of sovereign ratings for Asia Pacific at Fitch. "Hong Kong retains a number of credit strengths supporting its very high rating including the strength of the government's balance sheet, supply-side economic flexibility, and high standards of governance underpinned by high-quality public institutions," he said. Fitch had affirmed its rating on Sept 15. Riot police advanced on pro-democracy protesters in the early hours of Monday, firing volleys of tear gas after launching a baton-charge in the worst unrest in the city since China took back control of the former British colony two decades ago. The S&P analyst said the protests reflected different perceptions about Hong Kong's governance and were not unusual given its political status. Although these protests could have a modest and short-term negative impact on economic performance, it would not significantly affect investments. "We also see little impact on the strong institutions and governance that underpin the government’s credit ratings," said Kim Eng Tan, S&P's Singapore-based analyst. "Material negative impact on credit fundamentals are unlikely unless the situation deteriorates severely." Share prices fell more than 2 percent at one point and the Hong Kong dollar slipped. (Reporting by Umesh Desai and Saikat Chatterjee; Editing by Kim Coghill and Jacqueline Wong)