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Fitch Downgrades Hong Kong Over China’s Stronger Hand

Viewing Hong Kong’s skyline in the Tsim Sha Tsui district. The city’s tourism business has been hit by recent turmoil.

Hong Kong’s economy, already damaged by weeks of protests, was dealt a further blow on Friday, when Fitch Ratings downgraded its credit rating on the territory, citing China’s growing influence in the territory’s affairs.
The move will make it more expensive for Hong Kong and many companies closely tied to its fortunes to borrow money. But more broadly, the downgrade signals the growing belief within the financial world that the barriers between Hong Kong and mainland China are weakening, a development that could threaten the city’s longtime status as a global financial hub.
Fitch, which is based in the United States, is the first of the three major credit rating firms to downgrade Hong Kong’s creditworthiness. It is also the first time Fitch has downgraded its rating on Hong Kong since 1995.
Shopping is a major attraction in Hong Kong, which many economists now believe is sliding to recession.
But the downgrade was notable for highlighting how Beijing’s increasing encroachment into Hong Kong could threaten investor confidence.

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