Hong Kong's credit ratings may be cut if a killer disease drags on, damping economic growth and derailing government efforts to plug the city's budget deficit, Moody's Investors Service said.
The ratings "are likely to remain where they are at present unless this goes on for a very long time and affects the government's financial position in a very major way," said Steven Hess, a senior analyst with Moody's in New York.
Moody's has a stable outlook for Hong Kong's Aa3 local-currency debt rating and a positive outlook for its A3 foreign currency rating. The city's government is debt-free and had reserves of HK$305 billion (US$39 billion) at the end of February.
The disease, known as severe acute respiratory syndrome or SARS, has infected 708 people in Hong Kong, killing 16. Sales at shops and restaurants have dropped by as much as half as citizens shun crowds and tourists stay away for fear of catching the virus in the world's most densely populated city.
Lower spending may crimp tax revenue, widening a budget deficit the government forecast would be a record HK$70 billion for the year ended March 31, equal to 5.5 percent of GDP. As the deficit widens, the Hong Kong dollar's peg to the US dollar may be tested.
The 12-month Hong Kong dollar forward contract weakened to as much as 240, its weakest in at least five months, indicating the currency will be at 7.823 versus the US dollar in a year.
PLA MANEUVERS: Although Beijing has yet to formally announce military drills, its coast guard vessels have been spotted near and around Taiwan since Friday The Taiwanese military is on high alert and is closely monitoring the Chinese People’s Liberation Army’s (PLA) air and naval deployments after Beijing yesterday reserved seven airspace areas east of its Zhejiang and Fujian provinces through Wednesday. Beijing’s action was perceived as a precursor to a potential third “Joint Sword” military exercise, which national security experts said the PLA could launch following President William Lai’s (賴清德) state visits to the nation’s three Pacific allies and stopovers in Hawaii and Guam last week. Unlike the Joint Sword military exercises in May and October, when Beijing provided detailed information about the affected areas, it
CHINA: The activities come amid speculation that Beijing might launch military exercises in response to Lai’s recent visit to Pacific allies The Ministry of National Defense (MND) yesterday said China had nearly doubled the number of its warships operating around the nation in the previous 24 hours, ahead of what security sources expect would be a new round of war games. China’s military activities come amid speculation Beijing might organize military drills around the nation in response to President William Lai’s (賴清德) recent visit to Pacific allies, including stops in Hawaii and Guam, a US territory. Lai returned from the week-long trip on Friday night. Beijing has held two rounds of war games around Taiwan this year, and sends ships and military planes
Five flights have been arranged to help nearly 2,000 Taiwanese tourists return home from Okinawa after being stranded due to cruise ship maintenance issues, the Ministry of Transportation and Communications announced yesterday. China Airlines Ltd (中華航空), and EVA Airways Corp (長榮航空) have arranged five flights with a total of 748 additional seats to transport 1,857 passengers from the MSC Bellissima back to Taiwan, the ministry said. The flights have been scheduled for yesterday and today by the Civil Aviation Administration, with the cruise operator covering all associated costs. The MSC Bellissima, carrying 4,341 passengers, departed from Keelung on Wednesday last week for Okinawa,
China is deploying its largest navy fleet in regional waters in nearly three decades, posing a threat to Taiwan that is more pronounced than previous Chinese war games, the Ministry of National Defense said today. Speaking in Taipei, ministry spokesperson Sun Li-fang (孫立方) said the scale of the current Chinese naval deployment in an area running from the southern Japanese islands down into the South China Sea was the largest since China held war games around Taiwan ahead of 1996 Taiwanese presidential elections. China's military has yet to comment and has not confirmed it is carrying out any exercises. "The current scale is
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