By Gina Lee
Investing.com - Fitch Ratings has downgraded banking giant HSBC's (HK:0005) outlook in light of deteriorating economic conditions.
The ratings agency downgraded HSBC’s outlook from Stable to Negative as it expects the United Kingdom’s GDP to shrink by as much as 4% amid the global economic turbulence unleashed by the COVID-19 pandemic.
“The Negative Outlook reflects our view that the economic and financial market fallout from the pandemic creates material downside risks to the main operating environments in which HSBC is active, and to its ability to execute on its strategy and planned restructuring in line with its targets. We also see an increased risk of deterioration in HSBC's asset quality, earnings and capitalization as a result of the disruption, albeit from currently strong levels,” Fitch said in its report.
But Fitch did not change the Long-Term Issuer Default Rating from the current ‘A+’.
HSBC is currently domiciled in the U.K., and Hong Kong Secretary for Financial Services and the Treasury James Lau said today that HSBC would be welcomed back should they choose to move their domicile back to the special administrative region.
HSBC and Standard Chartered (LON:STAN) announced last Wednesday that they would cancel dividend payments from the fourth quarter of 2019 for a 12-month period, following a request from the United Kingdom’s chief regulator Prudential (LON:PRU) Regulation Authority.
HSBC stocks in Hong Kong were up by 2.37% by 12:04 AM ET (5:04 AM GMT) today.