International credit rating agencies have reaffirmed Hong Kong's robust financial standing, with S&P and Moody’s maintaining the city's ratings at AA+ and Aa3, respectively. This affirmation underscores the region's significant fiscal reserves, thriving capital markets, and a rapidly growing initial public offering (IPO) sector. Amid global economic uncertainties, Hong Kong continues to demonstrate resilience, marked by stable outlooks from major agencies and sustained growth in key financial indicators. The government has outlined strategies for fiscal sustainability, including controlled spending and increased revenue generation, aiming to restore surpluses in both operating and consolidated accounts within the next few years.
In recent developments, Moody’s upgraded its outlook for Hong Kong from negative to stable, emphasizing the city's strong fiscal buffers and external balance sheet. These attributes are bolstered by high per-capita income levels and substantial foreign exchange reserves. The affirmations from Fitch, S&P, and Moody’s reflect confidence in Hong Kong's ability to navigate through global economic challenges. The region's financial health is further evidenced by continuous growth in bank deposits and active capital markets, indicating investor trust and market vitality.
The IPO market in Hong Kong has experienced remarkable success this year, raising over $76 billion so far, which is more than seven times the amount raised during the same period last year. This surge nearly reaches 90% of the total funds raised throughout 2024. Such achievements highlight the attractiveness of Hong Kong as a premier destination for companies seeking to go public. Moreover, the government's strategic Budget plan for 2025-26 focuses on prudent fiscal management, targeting a balanced Operating Account by 2026-27 and eventual surpluses.
Capital expenditure will persist in vital projects such as the Northern Metropolis, supported by bond issuance and public-private partnerships. The Capital Account deficits are anticipated to diminish starting from 2026-27, contributing to an overall improvement in fiscal conditions. With bond proceeds factored in, the consolidated accounts are expected to achieve surplus by the 2028-29 financial year. Fiscal reserves are projected to remain well above $500 billion over the upcoming five years, reinforcing the city's financial stability.
Economic performance in the first quarter of 2025 showcased strong growth, despite ongoing global trade tensions. Easing international frictions alongside China's consistent economic expansion provide a supportive backdrop for Hong Kong's future prospects. The government remains optimistic about overcoming challenges and enhancing Hong Kong's status as a leading international financial, shipping, and trade hub under the "one country, two systems" framework. This approach ensures long-term prosperity and continued global relevance for the region.