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Following is the transcript (English portion) of the media session by the Financial Secretary, Mr Henry Tang, on the upgrading of Hong Kong's sovereign rating for long-term foreign currency by Moody's Investors Service at the Central Government Offices (West Wing) lobby this morning (October 16):
Financial Secretary: I would like to welcome Moody's announcement at 10 pm New York time that they have upgraded our long term currency outlook from A3 to A1, which is two notches improvement. The two-notch improvement is a reflection of the sound fundamental economy, as well as a very healthy and large international investment relative to our GDP. They have also upgraded China's long term currency outlook from A3 to A2.
Reporter: ...... do we have currency bonds?
Financial Secretary: The government does not have any currency bonds outstanding. However, there are many other quasi-government organisations which have foreign currency bonds outstanding.
Reporter: What is the practical effect of this announcement?
Financial Secretary: The practical effect is that it is a confirmation of our sound economic fundamental strength. Also, it is a recognition that our long-term outlook is good. In case we wish to issue any bonds, it will be helpful with this rating.
Reporter: Would anybody benefit right now from this improvement of rating?
Financial Secretary: A rating is an important indication as well as an important confirmation of our sound fundamental economy. Although, as a local, you may feel that the economy is growing quite well already, but to have an international rating agency to confirm this, it is always heartening to us.
Reporter: Could you comment on the hiring of Goldman and HSBC to help with the ratings, whether if money well-spent?
Financial Secretary: We have decided to hire HSBC and Goldman and to pro-actively solicit a rating from the rating agencies because most developed economies are doing so. And indeed, China is doing so as well. So we feel that it is a more pro-active way to engage the rating agencies. We feel that this pro-active approach will be a very useful way of going forward.
Reporter: Can you also comment on this time the agency is actually rating Hong Kong higher than China?
Financial Secretary: Moody's has said that Hong Kong's economy and China's economy are strongly linked together. I did not dispute that the two economies have very strong interaction with each other. Indeed, one of our strengths is this interaction. However, the fact that we get a higher rating than China in the long-term foreign currency rating is a reflection and a confirmation of the "One Country Two Systems". Although our economies are strongly linked, under the "One Country Two Systems", however, we are still two separate economies.
Reporter: This is a reflection of our fundamental economy. Does the higher rating for Hong Kong imply a stronger fundamental economy versus China?
Financial Secretary: A rating agency will have their independent and professional views. We, of course, welcome that we are now rated one notch higher than the Mainland. Of course, it's a reflection of the "One Country Two Systems" that we are two economies. As regards their views of the Mainland, I expect that you should get the quote from them rather than from me.
Reporter: We got the suggestion that when the two economies are really close together, Hong Kong might get dragged down. We now have a rating going up and Hong Kong is even higher. What accounts for that turn around perception?
Financial Secretary: The fact that we have given them very extensive briefings by our Financial Services and the Treasury Bureau, our Monetary Authority, as well as myself. I believe the reason that we are upgraded two notches in one go is because they are confident that we have concrete, realistic and sensible ways of managing the public expenditure and revenue forecast in the future.
Reporter: (About the Harbour Fest)
Financial Secretary: The Harbour Fest is an approved programme under the economic relaunch group organised by the American Chamber of Commerce. American Chamber of Commerce, out of their sincerity and their goodwill, has proposed their programme to us sometime back in May. It was approved by the working group. I'd like to express my appreciation to the media for publicising it as much as you have. It has helped us sell five thousand tickets last night. Please continue to publicise it for us, so we may sell more tickets.
(Please also refers to the Chinese portion of the transcript.)
End/Thursday, October 16, 2003
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