Fitch downgrades Hong Kong following months of unrest

Fitch Ratings downgraded Hong Kong’s long-term foreign currency issuer default rating to “AA” from “AA+” on Friday after months of unrest, citing a negative outlook of the Asian financial hub.

According to Fitch, ongoing events have called into question the stability and dynamism of Hong Kong's business environment.

Recent data has also shown the city's economic performance is at its weakest since 2010, with the protests especially dealing a blow to its tourism and consumption.

The agency holds that "One country, Two systems” allows Hong Kong a degree of autonomy and independent legal system following its return to China in 1997, to remain intact. Also, the increasing linkages with the mainland in economic, financial and sociopolitical fields imply the city's continued integration into the country's national governance system.

The Hong Kong Special Administrative Region (HKSAR) government announced new measures on Thursday to help businesses deal with the economic downturn, shortly before Chief Executive Carrie Lam announced the formal withdrawal of the fugitive bill.

According to Bloomberg, Iris Pang, an economist at ING bank NV didn’t think the issues of demonstrations and weak governance will last forever. "The financial industry will remain stable, so the situation won’t be so bad in the longer term.”

Another major global credit rating agency, S&P Global Ratings, commented last week that despite the chaos in Hong Kong, it believed that the long-term rating was well-supported at the current level of AA+ with a stable outlook.