Fitch raises HK debt rating on fiscal strength
Fitch Ratings raised Hong Kong’s debt rating to its second-highest ranking, citing the city’s fiscal strength and ability to weather external shocks with reserves.
Hong Kong’s long-term international debt rating was lifted to AA+ from AA, with a stable outlook, Fitch said in a statement today. The long-term local debt rating was kept at AA+ level.
The strong growth in Hong Kong’s economy and the government’s “prudent fiscal management” were reasons for the upgrade, the ratings company said. Moody’s Investors Service on November 11 upgraded Hong Kong’s government bond ratings to the second-highest ranking, citing the city’s economic links to China, whose ratings were raised on the same day.
“Hong Kong has withstood the global financial crisis with its strong external financial position, solid public finances, well-regulated and capitalised banking system,” Vincent Ho, a Hong Kong-based associate director at Fitch, said in an interview today. Fiscal Reserves
Hong Kong has fiscal reserves equivalent to 31 percent of its gross domestic demand and “virtually zero” public fiscal debt, Fitch said. The company estimated the city’s foreign exchange reserves will rise to $300 billion by end of 2012, the release said. The reserves were $267 billion at the end of October.
The International Monetary Fund said November 18 that Hong Kong is running a risk of an economic downturn due to rising asset prices and urged the city’s government to take more measures to curb the housing market.
One day later, Hong Kong announced additional taxes for homes resold within two years and increased down-payments for some mortgages, in a move to curb property speculation and risk of asset bubble.
The city’s economy expanded a more-than-estimated 6.8 percent in the third quarter, underpinning by recovered exports and domestic consumption. Hong Kong’s stock benchmark rose 5.4 percent this year.
Category: Hong Kong
