Hong Kong Annual Budget: 3.5% economic growth in 2025, real estate market recovery, and a 90% increase in average daily stock market turnover! Economic growth is expected to be between 2.5% and 3.5% in 2026

The Financial Secretary of the Hong Kong Special Administrative Region Government, Paul Chan, announced the financial budget for the 2026/2027 fiscal year on the 25th. Reporters from the Daily Economic News noted that Chan mentioned that in 2025, Hong Kong's economy was thriving, with strong external trade, a rebound in private consumption, and accelerated fixed investment growth, resulting in an overall economic growth of 3.5% for the year, marking three consecutive years of increase. Inflation remained mild. Excluding one-off measures from the Special Administrative Region Government, the basic inflation rate for 2025 was 1.1%. Last year, the Hang Seng Index rose 28% overall, with an expected economic growth of 2.5% to 3.5% in 2026 The stock market performed brilliantly. In 2025, the Hang Seng Index rose 28% for the year, with the average daily trading volume increasing by 90% to nearly HKD 250 billion, setting a historical high. The fundraising amount for new stock listings more than doubled compared to 2024, exceeding HKD 280 billion, ranking first globally. Residential property prices and transaction volumes both increased. Trading has remained active since March 2025, with the annual transaction volume rising to nearly 63,000, a four-year high. Property prices rose 3.3% for the year, ending a three-year decline; rents also increased by 4.3%. The transaction volume for non-residential properties rebounded, with the decline in rents and prices narrowing. Looking ahead, Chan stated that based on a comprehensive assessment of the current global and local economic situation, the economic growth for Hong Kong in 2026 is expected to be between 2.5% and 3.5%. With the local economy continuing to expand, inflation in 2026 is expected to be slightly higher than in 2025, with the basic inflation rate and overall inflation rate projected to be 1.7% and 1.8%, respectively. It is expected that Hong Kong's economy will achieve an average annual real growth of 3% from 2027 to 2030, with an average annual basic inflation rate of 2%. Has requested the Hong Kong Stock Exchange to review relevant listing regulations to attract more aerospace companies to list in Hong Kong Notably, Chan stated that he has requested the Hong Kong Stock Exchange to review relevant listing regulations to attract more aerospace companies to list in Hong Kong. According to Chan, the "14th Five-Year Plan" suggests accelerating the construction of a strong aerospace nation, and the National Space Administration has also proposed promoting the orderly expansion of commercial aerospace companies. Hong Kong can assist the mainland aerospace industry in connecting with global markets and provide professional services in research and development, financing, risk management, and legal matters. The Hong Kong Special Administrative Region Government's Office for Introducing Key Enterprises will lead the search for suitable aerospace companies to develop in Hong Kong. The Special Administrative Region Government has established the Hong Kong Space Robotics and Energy Center under InnoHK (Innovation Hong Kong R&D Platform) to participate in the national Chang'e 8 mission. The multifunctional lunar surface operation robot developed by the center has entered the initial testing phase for spacecraft, and this technology is expected to expand to ground applications. The "Innovation and Technology Fund" has also provided over HKD 100 million to support six R&D projects at universities. Among them, the "CUHK 1" satellite supported by the fund has been successfully launched and has entered its designated orbit Continuously Increasing Investment in Chip Technology R&D and Strengthening AI Application Training for All At the same time, Paul Chan stated that the pilot production line for the third-generation semiconductor chip technology research and trial production at the Hong Kong Institute of Microelectronics will be operational within the year, which will promote local chip R&D and industrial upgrading. In addition, the "New Industrial Acceleration Program" has supported two companies developing semiconductor chip technology and equipment, with a total investment exceeding HKD 1.5 billion. This program, launched by the Hong Kong SAR government in September 2024, aims to fund enterprises engaged in strategic industries (namely life and health technology, artificial intelligence and data science, as well as advanced manufacturing and new energy technology) to establish new smart production facilities in Hong Kong. According to Paul Chan, the "New Industrial Acceleration Program" has so far supported 4 projects, involving a total investment of approximately HKD 2.5 billion, with over 70% being private investment. Paul Chan also announced a grant of HKD 50 million to invite various public institutions, technology companies, and higher education institutions to organize AI application learning courses, lectures, and competitions, to enhance students, youth, and the public's awareness and application skills of AI, as well as the responsible use of AI. In higher education, starting from the 2025/26 academic year, all funded universities in Hong Kong will introduce 27 new bachelor's degree programs related to STEAM (Science, Technology, Engineering, Arts, Mathematics), covering fields such as AI, creative industries, and data science. For self-financing post-secondary institutions, starting from the 2027/28 academic year, AI-related courses will be prioritized in the "Designated Programs Funding Scheme." The compulsory information technology unit of the Hong Kong Vocational Training Council's Higher Diploma programs will also cover AI applications. In basic education, the "Quality Education Fund" has reserved HKD 2 billion to promote digital education in primary and secondary schools, to carry out school-based AI education projects, fund students to participate in related activities, and provide AI training for teachers. Furthermore, to enhance the competitiveness of the local labor force, the Hong Kong Employee Retraining Board will be upgraded to the "Skills Enhancement Board," which will provide various "skills-based" training, including AI applications. Making the Development of the Real Estate Investment Trust Market a Key Focus To consolidate Hong Kong's competitiveness as a global financial center, the budget clearly identifies the development of the Real Estate Investment Trusts (REITs) market as one of its key focuses and proposes several tax and regulatory amendment measures. Paul Chan stated that the SAR government and the Hong Kong Securities and Futures Commission will strive to implement the inclusion of REITs in the connectivity mechanism as soon as possible. At the same time, the authorities plan to submit a bill for regulatory amendments within the year to facilitate the privatization or restructuring of REITs. The authorities will also exempt stamp duty on the transfer of non-residential properties for REITs preparing for listing, with the bill for regulatory amendments expected to be submitted in the first half of next year. Regarding land supply, Paul Chan announced that considering the vacancy rate of non-residential properties and future supply and demand, the SAR government will continue not to sell general commercial land in the coming year In addition, the Hong Kong Investment Company will collaborate with regional and international long-term capital to guide funds towards high-quality commercial property projects that align with Hong Kong's industrial positioning, and connect these projects with enterprises in target industries. Regarding the residential market, Paul Chan stated that the authorities will prepare land for the construction of approximately 98,000 private housing units. The land sale schedule for the coming year includes 9 residential sites, along with railway property development, the Hong Kong Urban Renewal Authority, and private development and redevelopment projects, with an expected potential land supply for the entire year to support the construction of about 22,000 units. "I want to emphasize that the specific arrangements for land sales will be prudently announced quarterly, taking into careful consideration the market and other circumstances to ensure stable market development." At the same time, in response to the demand for student dormitories, the Development Bureau of the Hong Kong Special Administrative Region Government is inviting the market to submit expressions of interest for 3 related sites, and will consider the response to sell the land. Risk Warning and Disclaimer The market carries risks, and investment should be approached with caution. 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