China’s Banking and Property Sector Problems Affect Hong Kong: Analyst

A woman walks past empty buildings in Conch Bay, opposite the new Yujiapu financial district, in Tianjin, China on May 14, 2015. The massive government project incorporates dozens of skyscrapers. But a slowdown in growth in China's economy has raised doubts about the viability of such large scale projects, and some reports have described the district as a "ghost town." Greg Baker/AFP via Getty Images

With the sluggish economy in mainland China’s banking and property system, with bank depositors unable to withdraw their money, and home buyers boycotting mortgage repayments to banks, Hong Kong banks’ loans to the mainland are affected and its banks face increased risks.

“The impaired loan ratios for Hong Kong banks’ mainland loans will likely further rise this year in light of China’s economic slowdown,” said Helen Zhang, an economic analyst, in a July 14 report by the U.S. credit rating agency Moody’s.