Moody's downgrade unfair, says Matthew Cheung

Acting Chief Executive Matthew Cheung says Moody's neglected Hong Kong's advantages when it downgraded its ratings for the SAR. Photo: RTHK

Acting Chief Executive Matthew Cheung on Tuesday rejected Moody's downgrading of Hong Kong's credit rating as unfair, saying the agency had focused only on political governance.



Cheung's comment came after Moody's moved its ratings on Hong Kong, as a long-term issuer and its ability to honour senior unsecured financial obligations, down a notch, from Aa2 to Aa3.



The ratings company noted that the SAR government has so far failed to come up with an effective response to the anti-government movement and also said the lack of a solution to address political and economic issues linked to the protests may reflect more constraints on the autonomy of Hong Kong's institutions than previously thought.



But Cheung said Moody's criticism is inappropriate.



"When it comes to doing business, Hong Kong's business environment makes it one of the most attractive places for businesses. Our free economy ... these are all our advantages and the agency shouldn't just focus on politics," Cheung told reporters ahead of the weekly Executive Council meeting.



"We have upheld the One Country, Two Systems principle despite the seven months of unrest. When it comes to governance, we also rolled out a lot of livelihood initiatives, such as the 10 relief measures announced last week. These all show that we do have the will to govern."



In its statement explaining the downgrade, Moody's pointed out that it does not expect that the stimulus packages unveiled since August will effectively improve housing affordability or lead to a more equal distribution of income and wealth.



But the ratings firm lifted its outlook for Hong Kong from negative to stable, noting the city's fiscal strength and consistent macroeconomic stability.