Banking News

Hong Kong’s reputation as a business hub at risk

(12 December 2019 – Hong Kong) Hong Kong’s economic outlook continues to deteriorate as six months of street protests drove the local economy into a contraction, while persistent unrest puts the city’s business reputation and environment at risk, said Fitch Ratings.

The company, the first among the world’s three major credit rating agencies to downgrade Hong Kong’s creditworthiness, this week said the city’s economy is likely to have contracted by 1.5 percent in 2019, cutting its forecast from an earlier estimate of zero growth. Hong Kong’s economy entered into a “technical recession” in the third quarter.

While the HK$25 billion (US$3.2 billion) fiscal relief measures announced by the government since mid-August could improve its growth outlook for 2020 slightly, the lingering social unrest continues to make its economic outlook vulnerable, it said.

But some indicators continue to paint a positive picture for Hong Kong’s medium-term prospects. These include the city’s role as the flagship offshore financing centre for Chinese firms, as exemplified by Alibaba Group Holding’s listing

Banking sector deposits, business registrations and employment visas data too show little evidence that Hong Kong’s role as a global commerce centre has diminished.

“All of this underlines Hong Kong’s important role in channelling international finance to Chinese firms, one in which it is unlikely to be easily substituted,” Fitch said.