Ratings Agency Tantrum? Moody’s Downgrades Hong Kong

Ah Geography. It is tough being a ratings agency. They expect you to know the little things. Like Hong Kong being exposed to China. Because, well, Hong Kong is a part of China. Undoubtedly the banking system deserved a downgrade, a while ago. It is the timing of if it that makes it laughable.
Over the weekend, the where in the world is Edward Snowden game started in full force. No offense, but wasn’t the whole point of the PRIMS and Bonesaw programs to find people through electronic devices. He has four laptops full of documents. Should make a healthy drone strike target for the NSA. Or at the very least, the US should not look like Keystone cops on Sunday talk shows bumbling about his location.
So the US asked Hong Kong to extradite him back to the US, and the Hong Kong authorities gave US authorities the most diplomatic kiss off ever and referred us back to their questions over hacking operations in Hong Kong territory.
So started his journey which even had someone instagramming an empty aeroloft seat bound for Cuba. Yes, some journalist literally applied a filter to an empty seat saying he’s not here. Snowden probably earned himself a nice stay in Russia or he’s bound for Ecuador where he already has asylum.

Moody’s

Enter stage right Moody’s. Obviously China has been having issues with their banking sector for about the past year. Non performing loans, housing bubble, you name it. Anyone looking at the macro data coming out of China could see the at the very least it was heading for a soft landing, if not a full on crash.
Moody’s this morning came out a downgraded the Hong Kong banking sector outlook to negative. They cited concerns over real negative interest rates and cited the possibility of real Hong Kong property bubbles. One has to find it hard to believe they are just now realizing the outsized prices in the Hong Kong property market.
But the kicker is Moody’s main concern is Hong Kong’s increasing exposure to mainland China. Because a part of China being exposed to China is something new and must be monitored.
This doesn’t mean the downgrade wasn’t warranted. China has systemic issues. It is the timing that makes it funny. Hong Kong downgraded the US foreign policy to pathetic with an outlook of do you even know what you are doing over the weekend. So this makes it look more than coincidental.