- Credit ratings agency Fitch downgraded Hong Kong's long-term foreign-currency issuer default rating from "AA+" to "AA" on Friday, citing protracted turmoil in the city for its negative outlook.
- Even with concessions to some protester demands, a "degree of public discontent is likely to persist," Fitch analysts said.
Credit ratings agency Fitch downgraded Hong Kong on Friday, citing turmoil in the city.
The ratings agency cut Hong Kong's long-term foreign-currency issuer default rating from "AA+" to "AA" with a negative outlook.
"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, underscored by mainland officials taking a more public stance on Hong Kong affairs than at any time since the 1997 handover," Fitch analysts wrote in a note.
The city of Hong Kong is designated as a special administrative region of China under the "one country, two systems" principle, which gives Hong Kong citizens freedoms and rights that are denied to mainland Chinese. Hong Kong came under Beijing's rule in 1997 after a century and a half as a British colony.
Hong Kong's negative outlook reflect's the view that even with concessions to some protester demands, a "degree of public discontent is likely to persist," said Fitch, which added that it expects the "one country, two systems" framework to remain intact.
Earlier this week, Hong Kong's markets got a huge boost immediately after word came that the city's Chief Executive Carrie Lam was going to formally withdraw a controversial extradition bill that would have made it legal to send Hong Kong citizens to China to stand trial. The Hang Seng index soared almost 4% prior to the official announcement.
That said, protests in Hong Kong are set to continue this weekend.
A now withdrawn extradition bill has sparked protests that have occasionally degenerated into violence, creating Hong Kong's worst social unrest in decades and hurting the city's economy.
In August, Lam said Hong Kong's economy faces the "risk of downturn" amid the protests.
The full withdrawal of the bill was one of five demands by protesters. Others included the retraction any characterization of the movement as a "riot," and the dropping of all charges against protesters.
— CNBC's Grace Shao contributed to this report.