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.
The territory’s economy has been slammed since protests began in June, hitting retail and tourism businesses in particular. Many economists now believe Hong Kong is sliding to recession in the second half of this year, a forecast that Fitch echoed on Friday.