Fitch Ratings lowered its assessment of Hong Kong banks' operating environment to "a" with a stable trend from "a+" with a negative trend, citing the developing influence of links between the city and China.

The rating agency said May 9 that Hong Kong's growing connectivity with the Chinese economy and financial system may cause risks for the strength and independence of the city's regulatory and legal frameworks.

Fitch also notes that China's governance standards are lower than Hong Kong's.

The assessment takes into account the city's high macroprudential risk due to above-trend credit growth and the high inflation of real estate prices, which are primarily caused by the deepening connections with China.

Fitch said the Hong Kong Monetary Authority has not set limits or additional buffers explicitly for China-related risks and the rating agency does not expect the de facto central bank to change its stance in the near term.