---
title: "Hong Kong records HK$2.9 billion consolidated surplus for 2025-26. Here’s how"
description: "Hong Kong has recorded a HK$2.9 billion consolidated surplus for the 2025-26 financial year, reversing an expected HK$67 billion deficit. This improvement is attributed to a strong IPO market and bond"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/277066621.md"
published_at: "2026-02-26T15:35:44.000Z"
---

# Hong Kong records HK$2.9 billion consolidated surplus for 2025-26. Here’s how

> Hong Kong has recorded a HK$2.9 billion consolidated surplus for the 2025-26 financial year, reversing an expected HK$67 billion deficit. This improvement is attributed to a strong IPO market and bond sales, with analysts optimistic about future surpluses due to a stabilizing property market and increased corporate profits. The government anticipates a surplus of HK$22.1 billion for 2026-27, supported by significant fund transfers. However, concerns about the legitimacy of counting bond proceeds as revenue persist, with experts emphasizing the importance of proper fund allocation.

A combination of a strong initial public offering (IPO) market and bond sales has helped put Hong Kong’s financial health back in the black sooner than expected, with analysts expecting a robust pipeline of listings to be key to sustaining the city’s surplus. In his budget speech on Wednesday, Financial Secretary Paul Chan Mo-po said the city was previously expected to record a HK$67 billion deficit for the 2025-26 financial year, which ends on March 31, but emerged with an estimated HK$2.9 billion consolidated surplus. Some economists on Thursday expressed optimism regarding the outlook for 2026-27, pointing to factors such as the stabilised property market and the transfer of billions of Hong Kong dollars between government funds or accounts. Billy Mak Sui-choi, an associate professor at Baptist University’s accountancy, economics and finance department, attributed the operating surplus in 2025-26 directly to the bustling stock market, noting that robust turnover and listing activities were the primary engines for government revenue. “The main reason is that in the past year … Hong Kong stock turnover was much larger, so government stamp duty \[revenue\] increased by a lot, by tens of billions,” he said. Lee Shu-kam, head of Hong Kong Shue Yan University’s economics and finance department, expressed optimism that a compounding effect from new companies coming to Hong Kong, a booming stock market and a recovering property sector would mutually reinforce one another to sustain higher tax revenues. “The future situation is relatively optimistic. This year, \[the city’s financial health\] was mainly supported by corporate profits and returns from the stock market, but if we can attract more companies to Hong Kong in the future, the result will naturally be even better,” he said. “If we see more start-ups joining the market, profits benefiting, and the stock market becoming more buoyant – and if the property sector improves amid this – tax revenue will see a compounding increase. The overall picture is optimistic.” The strong IPOs showing gave rise to an estimated stamp duty revenue of HK$99.5 billion in 2025-26, HK$31.9 billion higher than previously thought. Similarly, profits tax revenue beat forecasts by HK$16.8 billion, reaching HK$209 billion. The success of the new listings and strong stock trading also prompted a record profit for the Hong Kong Exchanges and Clearing two years in a row, with its net profit jumping by 36 per cent to HK$17.75 billion last year. The exchange earlier reported that as of the end of January 2026, more than 400 companies were in the listing pipeline, representing a diverse sector spanning healthcare, materials, technology-media-telecoms and industrials. Hong Kong finished 2025 as the world’s top venue for IPO fundraising, raising US$37.4 billion across 119 listings. Riding on the momentum, the financial secretary has also tasked the bourse with reviewing listing requirements to facilitate the listing of aerospace enterprises. However, bond sales were also a significant contributor to the consolidated surplus. The government issued HK$155 billion in sustainable and infrastructure bonds in 2025-26, which were booked as revenue in the Capital Works Reserve Fund. Repayments for government bonds amounted to about HK$51.69 billion. Without them, the consolidated account would have recorded a deficit of more than HK$100 billion due to heavy capital expenditure. “If looking purely at the accounts … one might think it is ‘cooking the books’ \[to count debt as revenue\],” Lee said. “But following the government’s definition, it is a surplus.” Mak agreed the surplus figure involved “accounting techniques” but defended the rationale. “If you take the thousands of billions needed for the Northern Metropolis and book it all as expenditure in one year, you will definitely have a deficit,” Mak said. “But borrowing money to invest is a financing method, just like taking a mortgage to buy a flat.” The financial secretary explicitly said the bond issuance programme would be expanded to an annual target of HK$160 billion to HK$220 billion for the next five years. Consequently, the debt-to-GDP level is projected to rise from 14.4 per cent to 19.9 per cent by 2030-31. Lee emphasised that the legitimacy of this strategy hinged on how the funds were deployed. “Issuing bonds is not for paying civil servants’ salaries or welfare … If it were, that would be a huge problem,” he said. “But if it is used for transport infrastructure … then this bond issuance is completely fine.” French investment bank Natixis described the persistent financial deficit, masked by bond proceeds, as the “new norm” for Hong Kong. Looking ahead to 2026-27, the government forecasts a consolidated surplus of HK$22.1 billion, which is heavily buttressed by aggressive fund transfers. For example, the government plans to transfer HK$75 billion in investment income from the Exchange Fund to the Capital Works Reserve Fund and HK$37 billion from the accumulated surplus of the Bond Fund back into government accounts. Christopher Hui Ching-yu, secretary for financial services and the treasury, defended the use of Exchange Fund proceeds, saying the transfer involved “extra investment income” rather than the principal capital required to defend the currency peg. He said the debt-to-GDP proportion remained controllable compared with the level of other advanced economies. The Exchange Fund, Hong Kong’s de facto sovereign wealth fund, is used to defend the US dollar currency peg and finance infrastructure development.

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> **Disclaimer**: This article is for reference only and does not constitute any investment advice.