Moody’s Investors Service’s decision to downgrade Hong Kong’s debt rating last week was based on “shallow” evidence, Hong Kong Financial Secretary Paul Chan (陳茂波) wrote in a blog yesterday.
“The evidence on which the ratings company mechanically downgraded Hong Kong’s debt rating based on the very close economic relationship between Hong Kong and the mainland is shallow,” Chan wrote in a blog on the official Web site of the financial secretary.
Enhancing cooperation with China cannot be considered negative, as China is the main growth engine for the global economy, he added.
Moody’s on Wednesday cut its rating on China’s debt for the first time since 1989, a challenge to the view that the country’s leaders can rein in leverage while maintaining the pace of economic growth.
Hours later, the company cut the rating on Hong Kong’s local and foreign-currency issuances from “Aa1” to “Aa2,” and changed the outlook from “negative” to “stable.”
It was the territory’s first cut in ranking by Moody’s since the Asian financial crisis in 1998.
“Credit trends in China will continue to have a significant impact on Hong Kong’s credit profile due to close and tightening economic, financial and political linkages with the mainland,” Moody’s said in its statement.
Closer financial ties “risk introducing more direct contagion channels between China’s and Hong Kong’s financial markets,” it said.
Chan, who was appointed financial secretary in January, said Moody’s concern for China’s economy lacked objective evidence because growth and exports this year have improved, while steel and coal oversupply have eased.
In response to the company’s “contagion channels” worry, Chan said Hong Kong’s financial system is stable and it has policies in place to improve risk management for China-related loans.
The rating firm’s outlook cut in March last year has proven to be “exaggerated” based on economic growth since then, Chan also wrote.
Moody’s cut Hong Kong’s outlook from “stable” to “negative” last year, because it said the territory’s credit profile tracked China’s.
Days earlier, it lowered China’s credit-rating outlook, highlighting the country’s surging debt burden and questioning the government’s ability to enact reforms.
China’s currency and stocks rallied, despite the downgrade.
The onshore yuan strengthened 0.5 percent, the biggest weekly gain since July last year.
Shanghai’s benchmark gauge climbed 0.6 percent last week, the most since the week ended April 7.
Hypermarket chain Carrefour Taiwan and upscale supermarket chain Mia C’bon on Saturday announced the suspension of their partnership with Jkopay Co (街口支付), one of Taiwan’s largest digital payment providers, amid a lawsuit involving its parent company. Carrefour and Mia C’bon said they would notify customers once Jkopay services are reinstated. The two retailers joined an array of other firms in suspending their partnerships with Jkopay. On Friday night, popular beverage chain TP Tea (茶湯會) also suspended its use of the platform, urging customers to opt for alternative payment methods. Another drinks brand, Guiji (龜記), on Friday said that it is up to individual
UNCERTAINTIES: Exports surged 34.1% and private investment grew 7.03% to outpace expectations in the first half, although US tariffs could stall momentum The Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) yesterday raised its GDP growth forecast to 3.05 percent this year on a robust first-half performance, but warned that US tariff threats and external uncertainty could stall momentum in the second half of the year. “The first half proved exceptionally strong, allowing room for optimism,” CIER president Lien Hsien-ming (連賢明) said. “But the growth momentum may slow moving forward due to US tariffs.” The tariff threat poses definite downside risks, although the scale of the impact remains unclear given the unpredictability of US President Donald Trump’s policies, Lien said. Despite the headwinds, Taiwan is likely
READY TO BUY: Shortly after Nvidia announced the approval, Chinese firms scrambled to order the H20 GPUs, which the company must send to the US government for approval Nvidia Corp chief executive officer Jensen Huang (黃仁勳) late on Monday said the technology giant has won approval from US President Donald Trump’s administration to sell its advanced H20 graphics processing units (GPUs) used to develop artificial intelligence (AI) to China. The news came in a company blog post late on Monday and Huang also spoke about the coup on China’s state-run China Global Television Network in remarks shown on X. “The US government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon,” the post said. “Today, I’m announcing that the US government has approved for us
The National Stabilization Fund (NSF, 國安基金) is to continue supporting local shares, as uncertainties in international politics and the economy could affect Taiwanese industries’ global deployment and corporate profits, as well as affect stock movement and investor confidence, the Ministry of Finance said in a statement yesterday. The NT$500 billion (US$17.1 billion) fund would remain active in the stock market as the US’ tariff measures have not yet been fully finalized, which would drive international capital flows and global supply chain restructuring, the ministry said after the a meeting of the fund’s steering committee. Along with ongoing geopolitical risks and an unfavorable
RSS