Fitch says renewed bouts of violence will taint HKBusiness | 10 Sep 2019 3:16 pm
The potential for renewed social unrest could further undermine confidence in public institutions, and tarnish perceptions of Hong Kong's governance, political stability and business environment, said Fitch Ratings after downgrading Hong Kong from "AA+" to "AA".
Fitch expects Hong Kong economic growth at zero this year with a contraction during the second half, and 1.2 percent growth in 2020.
The downgrade of Hong Kong reflects more economic, financial and socio-political linkages between the SAR and the mainland, implying the further integration into China's national governance system, Fitch said.
"Even with concessions to some protester demands, a degree of public discontent is likely to persist," said Andrew Fennell, lead analyst for Hong Kong and China.
Fitch Ratings also predicts that China's growth will slwo to 6.1 percent this year and 5.7 percent next year, while China may introduce more stimulus such as required reserve ratio cuts and infrastructure spending.
Stephen Schwartz, head of Asia-Pacific sovereign ratings, said Chinese authorities will stop short of the type of credit-led policies, which could exacerbate medium-term financial and economic imbalances.
Fitch meanwhile, forecasts that the United States Federal Reserve will cut interest rates one more time in December before holding rates steady at 2 percent, based on the view that a US recession is imminent.