Moody's downgrades Hong Kong banking system

Moody’s Investors Services has downgraded its outlook for the Hong Kong banking system from “stable” to “negative,” specifying concerns over increasing exposure to the mainland and negative real interest rates, South China Morning Post reported. Negative interest rates, a trend unlikely to change due to monetary easing in developed countries, could force asset prices to record levels, according to Moody’s Vice President and Senior Analyst Sonny Hsu. At the end of 2012, Hong Kong banks increased their loan exposure to the mainland to 16.5%, up from 9.8% in 2009. Other analysts speaking to the Post, however, cast doubt on these concerns, stating that such loan exposure was “hardly excessive.”