- May 19, 2007
- Reaction score
I don’t think anything will replace Hong Kong. But that doesn’t mean Hong Kong doesn’t stop being what it was, a safe place for business into China.
That's entirely reliant on China's attempts to intrude into Hong Kong's autonomy, and the current SAR government's failure to actually govern and not delegate their public interactions to the police.
The protests are a temporal element and the finance industry has endured worse- structural changes to governance are what they're afraid of.
From S&P and Moody's:
"Moody's has previously noted that a downgrade could be triggered by a shift in the current equilibrium between the SAR's (Special Administrative Region's) economic proximity to and legal and regulatory distance from China," Moody's said in a statement.
The institutional features that grant Hong Kong greater political and economic autonomy - together with the city's intrinsic credit strengths - accounted for Hong Kong's higher rating than China, the agency said.
It said it would "likely downgrade Hong Kong's rating" if it concluded the protests, or measures taken by the Hong Kong government to resolve them, were likely to damage Hong Kong's medium-term economic prospects, or "signify an erosion in the predictability and effectiveness of its governing, judicial and policymaking institutions."
Hong Kong's leader, Carrie Lam, told a group of businessmen in late August that her "political room for manoeuvring is very, very, very limited", because the unrest has become a national security and sovereignty issue for China.
The longer the standoff continues, the greater the risk that Hong Kong's attractiveness as a global economic and financial centre would be diminished, Moody's said.
Dwindling capacity for the government to implement certain policies could "undermine key drivers of its competitiveness and macroeconomic stability."
Moody's downgrades Hong Kong outlook to 'negative' as protests continue
HONG KONG (REUTERS) - Credit rating agency Moody's changed its outlook on Hong Kong's rating to negative from stable on Monday (Sept 16), reflecting what it called the rising risk of"an erosion in the strength of Hong Kong's institutions" amid the city's ongoing protests.. Read more at...
"Months of persistent conflict and violence are testing the perimeters and pliability of the 'one country, two systems' framework that governs Hong Kong's relationship with the mainland," Fitch said in a statement. "The gradual rise in Hong Kong's economic, financial, and socio-political linkages with the mainland implies its continued integration into China's national governance system, which will present greater institutional and regulatory challenges over time."
"Ongoing events have also inflicted long-lasting damage to international perceptions of the quality and effectiveness of Hong Kong's governance system and rule of law, and have called into question the stability and dynamism of its business environment," Fitch said.
Fitch downgrades Hong Kong for first time since 1995 on turmoil
HONG KONG (BLOOMBERG) - Fitch Ratings downgraded Hong Kong as an issuer of long-term, foreign currency debt for the first time since 1995, saying that the territory's recent political turmoil raises doubts about its governance.. Read more at straitstimes.com.
Ironically, I think the finance industry is what protects Hong Kong at the same time. China is credit-strapped and they need Hong Kong as a FX entry point (I think around 70% of all Chinese FX exchanges still occurs in Hong Kong).
In Hong Kong, China can't pull an Iran, turn off the lights, and emerge with bloodied hands. Turning off forms of communication would fundamentally signal an end to Hong Kong's position as a financial hub- yet this continued connection to the outside world is what allows protesters to actively document and spead evidence of police abuses and false-flag attempts, and allow the greater public to see what's happening.
As of now, I think the protests are at a crossroads, and we'll need to see how the CPC responds to the democractic victories; how they'll attempt to save face. In their views, they can't lose- after all, it's all been 70 continuous years of progress and victory, hasn't it?