The protests in Hong Kong continue, and the political unrest in the region has begun to have an impact on the health of its economy. According to a recent article by Reuters, Moody's knocked down Hong Kong's rating from stable to negative. Moody's made this decision as it deemed the risk from the protests has caused "an erosion in the strength of Hong Kong's institutions." Fitch also downgraded Hong Kong from AA to AA+.
In a statement, Moody's said the downgrade was also the result of Hong Kong's "economic proximity to and legal and regulatory distance from China." Financial secretary for Hong Kong Paul Chan deems the dismissed the downgrade as a decision not based in truth.
"Hong Kong's financial markets and its banking system have been functioning normally in the past few months," Chan said. "The Linked Exchange Rate System has been operating smoothly. Banks remain well capitalized with ample liquidity."
—Christie Citranglo, editorial associate