The Hong Kong Special Administrative Region Government on July 31 welcomed Standard & Poor’s (S&P) decision to upgrade Hong Kong’s long-term foreign- and local-currency sovereign ratings to “AA+” from “AA,” with “Stable” outlook.
S&P attributes the upgrade to the Mainland’s improving credit strength and the Hong Kong government’s fiscal performance. The city’s strong economic and financial attributes also justify its credit ratings. The agency expects Hong Kong’s flexible economy and sound banking sector to maintain 5% economic growth.
According to S&P, Hong Kong’s large net external asset position provides protection from any liquidity risks associated with volatile financial flows. The forecast cyclical slowdown of real GDP growth should not affect Hong Kong’s long-term prospects, the agency noted.
Welcoming the news, Hong Kong Financial Secretary John C. Tsang said the upgrade reflects international recognition of the city’s strong economic fundamentals and sound policies. These credit qualities enable Hong Kong to benefit from growth and developments in Asia, particularly from those on the Mainland.
“The upgrade is a manifestation of Hong Kong’s economic resilience amidst global uncertainty,” Mr. Tsang said. “On the fiscal front, the government will continue to strengthen Hong Kong’s public finances with our usual prudence and discipline.”
S&P last raised the outlook for Hong Kong’s long-term foreign- and local-currency sovereign ratings in July 2007.
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