MOODY’S DOWN­GRADE

New Straits Times - - Business -

eco­nomic growth.

Hours later, the com­pany cut the rat­ing on lo­cal- and for­eign­cur­rency is­suances to “Aa2” from “Aa1” and changed the out­look to “sta­ble” from “neg­a­tive”. It was the ter­ri­tory’s first cut in rank­ing by Moody’s since the Asian fi­nan­cial cri­sis in 1998.

“Credit trends in China will con­tinue to have a sig­nif­i­cant im­pact on

Hong Kong’s credit pro­file due to close and tight­en­ing eco­nomic, fi­nan­cial and po­lit­i­cal link­ages with the main­land,” said Moody’s in its state­ment.

Closer fi­nan­cial ties “risk in­tro­duc­ing more di­rect con­ta­gion chan­nels be­tween China’s and car. This space is only for fo­cus­ing on brand build­ing,” said Xu Jing, the Hyundai ex­ec­u­tive in charge of the project.

The cen­tre was planned be­fore the re­cent po­lit­i­cal ten­sions, but its com­ple­tion is now a key plank in Hyundai’s ef­forts to re­gain a lost po­si­tion in China as lo­cal car­mak­ers and Euro­pean brands Hong Kong’s fi­nan­cial mar­kets”.

Hong Kong’s gov­ern­ment said in a state­ment on its web­site shortly af­ter­ward that it dis­agreed with the de­ci­sion by Moody’s, cit­ing Chan.

The rat­ings com­pany’s over­looked “sound eco­nomic fun­da­men­tals, ro­bust fi­nan­cial reg­u­la­tory regime, re­silient bank­ing sec­tor and strong fis­cal po­si­tion”, said the gov­ern­ment.

Chan, who was ap­pointed fi­nan­cial sec­re­tary in Jan­uary, said Moody’s con­cern for China’s econ­omy lacked ob­jec­tive ev­i­dence be­cause growth and ex­ports this year had im­proved, gain ground. Volvo-owner Geely and Great Wall Mo­tor are also look­ing to move up­mar­ket.

The brand­ing store ven­tures into ter­ri­tory tra­di­tion­ally held by pre­mium names such as Daim­ler’s “Mercedes me” stores and BMW’s brand cen­tres, al­ready in China.

Hyundai is also con­sid­er­ing us­ing while steel and coal over­sup­ply had eased.

In re­sponse to Moody’s “con­ta­gion chan­nels” worry, Chan said Hong Kong’s fi­nan­cial sys­tem was very sta­ble and it has poli­cies in place to im­prove risk man­age­ment for main­land-re­lated loans.

The rat­ing firm’s out­look cut in March last year had proven to be “ex­ag­ger­ated” based on eco­nomic growth since then, Chan also wrote.

Moody’s cut Hong Kong’s out­look to “neg­a­tive” from “sta­ble” last year be­cause it said the city’s credit pro­file tracked China’s. Days ear­lier, it low­ered China’s credit-rat­ing out­look, high­light­ing the coun­try’s surg­ing debt bur­den and ques­tion­ing the gov­ern­ment’s abil­ity to en­act re­forms. Bloomberg com­plete knock-down (CKD) kits shipped from South Korea to as­sem­ble Ge­n­e­sis cars in China, more than halv­ing im­port tar­iffs to 10 per cent, said two peo­ple.

Build­ing Ge­n­e­sis cars from kits in China would also pre­vent tech­nol­ogy leak­ing to its lo­cal jointven­ture part­ner, BAIC , one of the peo­ple added. Reuters

REUTERS PIC

Hyundai Mo­tor will open a brand ex­pe­ri­ence cen­tre in Septem­ber in Bei­jing’s 798 Art Dis­trict, a trendy hub of re­fur­bished fac­tory build­ings.

Paul Chan

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