Fitch has downgraded one of Asia’s major financial hubs after months of violent protests, stating that Hong Kong’s rating outlook is currently negative.

The global credit rating agency issued its statement on Friday, downgrading Hong Kong’s long-term foreign currency issuer default rating from ‘AA+’ to ‘AA.’ Fitch said that public discontent within the financial hub is likely to persist despite steps taken by authorities to make peace with protesters.

Fitch predicts that Beijing’s “one country, two systems” framework, under which Hong Kong is currently governed, is likely to remain intact. Regarding the hub’s economy, the rating agency expects Hong Kong’s revenue to underperform the budget forecast.

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However, there is little to indicate that the protests are the reason for the city's financial woes. Hong Kong's economic slide began months before the protests. The city's economy grew by only 1 percent over the first half of 2019, compared to an impressive 6.8 percent growth last year.

Hong Kong's economic problems are more likely the result of the trade war between the United States and China. The city's economy is tied closer to China than ever before and the impact of Washington's tariffs on Chinese goods are being felt by the financial markets in Hong Kong.

Protests in the former British colony, which was returned to China in 1997, began in May, sparked by a now suspended bill allowing local criminal suspects to be extradited to mainland China. However, the protests have evolved into a backlash against the Hong Kong government.

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Following news of the Fitch rating downgrade, Hong Kong leader Carrie Lam said she strongly disagreed with the agency. During her visit to mainland China on Friday, she also noted that the withdrawal of the extradition bill is only a “first step” in the government’s work towards making peace with the demonstrators.

After the withdrawal of the extradition bill, Hong Kong stocks closed higher on Friday, their best week since June.

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