S&P Global Ratings has kept Hong Kong’s rating at ‘AAA’, citing the special administrative region’s (SAR) exceptional degree of autonomy in many policy areas as a key reason why its credit ratings remain strong.
S&P’s rating announcement for Hong Kong comes one month after Moody’s downgraded Hong Kong by one notch to Aa2 after it cut China’s sovereign credit to A1 from Aa3. Fitch, meanwhile, rates China at A-plus.
“Hong Kong’s policy autonomy and strong financial resources are expected to insulate the territory against negative credit developments in the rest of the country to a larger extent than other Chinese sub-national governments,” said S&P analysts Kim Eng Tan and Christopher Lee.
S&P says that the city’s economic, financial and governance systems were still separate and very different from the rest of China, in line with the “one country, two systems” framework.
While S&P said competition and economic dependency on the mainland has increased for Hong Kong, more mainland companies are operating in the SAR contributing to price and asset inflation.