Top credit rating agency Moody’s has downgraded Macao’s outlook from stable to negative, mirroring its latest assessment of mainland China’s deteriorating economic situation.
Macao’s rating change was due to “tight political, institutional, economic and financial linkages” between the SAR and China, Moody’s explained in a statement issued yesterday.
The US-headquartered agency also downgraded Hong Kong’s outlook from stable to negative for the same reasons.
“Macao’s large tourism and gaming sectors are heavily dependent on China, while its banking system is similarly exposed to cross-border claims to the mainland,” Moody’s said.
Areas of optimism were Macao’s “formidable credit strengths” (including high per capita income, no outstanding government debt, and strong financial buffers) moderate political risks, and low foreign currency risks, according to the statement.
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“Moody’s could revise the outlook to stable upon evidence that Macao’s economy, government’s finances and institutions are effectively and durably protected from developments in mainland China,” it noted.
The local government has objected to its new rating and to Moody’s position on China, according to Macau Post Daily.
In a statement cited by the paper, the Monetary Authority said that the SAR’s close economic ties with the mainland provided strong support for long-term development.
“China’s macro-economy continues to recover and high-quality development is steadily advancing,” the statement read. “China’s economy will maintain its upward momentum, and China will remain an important engine for stable growth of the world economy.”
The authority also pointed to Macao’s GDP growing by 77.7 percent in real terms, year-on-year, and the momentum its diversification strategy would deliver to the economy.
