Ratings agency Fitch has downgraded its opinion of the Hong Kong banking sector due to its increasingly close ties with the mainland’s financial system, reports the Financial Times.
It took the operating environment for Hong Kong’s banks from “a+/stable” down to “a/negative”, citing the “growing influence of the links between [Hong Kong] and mainland China.”
Forecasting that banks in the special administrative territory will “increasingly finance mainland customers’ activities in China” and Chinese banks will “leverage their considerably larger resources and customer bases to pursue growth in Hong Kong,” Fitch warned that further integration could blur boundaries between the two financial systems, making risk assessments more difficult.