Fitch downgrades Hong Kong as city braces for more protests

HONG KONG - HONG KONG. Global credit rating agency Fitch Ratings on Friday downgraded Hong Kong's long-term foreign currency issuer default rating to "AA" from "AA+" following months of unrest and protests in the Asian financial hub.

Hong Kong's rating outlook is negative, Fitch Ratings said in its statement. The massive, and sometimes violent protests have roiled the financial centre as thousands chafe at a perceived erosion of freedoms and autonomy under Chinese rule.

Fitch said it expects the "one country, two systems" framework to remain intact, but added that public discontent is likely to persist despite recent concessions to certain demands by protesters.

The rating agency said it expects Hong Kong's financial buffers to remain intact, although it anticipates that the region's revenue will underperform budget forecast.

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Hong Kong is bracing for more demonstrations this weekend, with protesters threatening to disrupt transport links to the airport, after embattled leader Carrie Lam's withdrawal of a controversial extradition bill failed to appease some activists.

Protesters plan to block traffic to the city's international airport on Saturday, a week after thousands of demonstrators disrupted transport links, sparking some of the worst violence since the unrest escalated three months ago.

In an advertisement on Friday in the South China Morning Post newspaper, the Airport Authority of the Asian financial hub urged protesters "not to disrupt the journey of tens of thousands of travellers who use the airport every day".

Other rallies are planned on Friday evening across the city, at sites such as subway stations and near government headquarters.

On Wednesday, Lam announced the withdrawal of the extradition bill, conceding one of the protesters' five key demands, although many said the move was too little, too late.

The bill, which would have allowed people in the former British colony to be sent to mainland China for trial in courts controlled by the Communist Party, triggered mass protests that have since widened into a backlash against the Hong Kong government and its political masters in Beijing.

The massive, and sometimes violent, protests present Chinese President Xi Jinping with his greatest popular challenge since he came to power in 2012.

The turmoil is also pummeling Hong Kong's economy, which faces its first recession in a decade. There is evidence some funds are being moved to rival financial centres, such as Singapore.

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Many protesters remain angry over Lam's refusal to grant an independent inquiry into perceived police brutality against them. Police have fired tear gas and bean bag rounds at protesters, who, in turn, have thrown petrol bombs and bricks at them in running battles.

The protesters' three other demands are: retraction of the word "riot" to describe rallies, release of all demonstrators arrested and the right for Hong Kong people to choose their own leaders.

Many residents fear Beijing is eroding the autonomy granted to Hong Kong when it was handed back to China in 1997.

China denies the charge of meddling and says Hong Kong is an internal affair. It has denounced the protests, warning of the damage to the economy and the possible use of force to quell the unrest.

Legislation addressing China's actions in Hong Kong will be among the top priorities pushed by U.S. Senate Democrats when Congress returns to work after a recess next week, their leader said on Thursday. 

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