The Hong Kong Special Administrative Region Government welcomed Fitch's decision to upgrade Hong Kong's long-term foreign-currency sovereign rating to "AA" from "AA-", with "Stable" outlook.

Fitch attributed the upgrade to Hong Kong's strong external financial position, improving public finances, high level of fiscal reserves and a credible linked exchange rate system.

Fitch also recognized that Hong Kong's self-determined exchange rate regime was an important manifestation of the economic and financial policy autonomy of Hong Kong. In addition, based on the established 10-year track record of political interaction between Hong Kong and the Mainland, Fitch accepted that many of the potential political risks identified in the early years of Chinese sovereignty over Hong Kong could presently be set aside.

Welcoming the news, the Financial Secretary, Mr. John Tsang, said the upgrade reflected international recognition of Hong Kong's strong economic fundamentals.

"We will continue to capture the immense opportunities arising from the tremendous growth in the Mainland market. The expansion of the Qualified Domestic Institutional Investor (QDII) scheme and CEPA initiatives is a clear demonstration of the strength of Hong Kong's financial platform for the further liberalization of the Mainland market," Mr. Tsang said.

"On the fiscal front, we are committed to continue to strengthen Hong Kong's public finances further with our usual prudence and discipline," Mr. Tsang said.

Fitch last raised Hong Kong's long-term foreign-currency sovereign rating outlook to "Positive" from "Stable" in July, 2006. The long-term local-currency sovereign rating is currently at "AA+", with "Stable" outlook.