John Lee, Hong Kong’s chief executive, outlined the measures in his annual policy address on Wednesday as the Chinese territory grappled with the retreat of foreign companies and an outflow of foreign workers and residents following years of pandemic restrictions and a political crackdown.
“We must . . . sustain our efforts to strengthen Hong Kong’s competitiveness in view of the fierce global competition,” Lee said.
The territory’s economy grew a lacklustre 1.5 per cent year on year in the second quarter, while home prices fell for four consecutive months between May and August this year, and real estate and land sales transactions slowed, cutting into one of the government’s largest sources of revenue.
Hong Kong has the lowest fertility rate in the world at 0.8 births per woman, according to the UN Population Fund, and recorded the departure of more than 140,000 members of its workforce — from a 7.5mn population — from 2020-2022, with many residents relocating to the UK, Canada and Australia under special immigration schemes.
Stamp duties for non-permanent residents will be slashed from 30 per cent to 15 per cent, while a 15 per cent levy for residents purchasing a second property will be halved to 7.5 per cent.
Michelle Lam, greater China economist at Société Générale, said the stamp duty cuts would benefit developers and that any stimulus for transactions would probably be shortlived as investors were still being deterred by high global interest rates.
Rival Asian financial hub Singapore this year doubled stamp duties on private property sales to foreigners to 60 per cent in an effort to cool prices that soared in response to an influx of Hong Kong and mainland Chinese residents.
The Hang Seng Properties index, which tracks the city’s top developers, had risen as much as 3.7 per cent ahead of Lee’s address but lost ground in afternoon trading to be up just 0.8 per cent. The gauge has fallen almost a third this year.
Lee said Hong Kong would also trim a stamp duty on stock market transactions from 0.13 per cent to 0.1 per cent to shore up trading volumes in its $4tn equities market, and announced a new entry scheme for investors who committed HK$30mn or relocated assets including stocks, funds and bonds to the Chinese territory.
The city’s government will also introduce legislation to make it easier for overseas companies to redomicile to Hong Kong. Last year, Lee’s administration rolled out talent pass schemes to try to lure workers to the territory. Most of those who were granted visas were from mainland China.
Lee also announced that the government would look to enact a local security law next year, as outlined under Article 23 of its Basic Law, or mini-constitution. Beijing imposed a sweeping national security law on the territory in 2020 following anti-government protests.
Ken Lau, a Hong Kong resident who had his first child last year, said the HK$20,000 handout would not encourage him to consider having another.
“The cost of hiring a nanny, for instance, is already much higher than the cash incentive,” said the financial services sector worker in his 30s. “Many of the people I know have also left Hong Kong looking for better education for their children after the political changes.”
Gary Ng, senior economist with Natixis, said the economic outlook would “still be challenging” for Hong Kong. The bank forecast the territory’s economy would grow 4.2 per cent this year.
“The good news is we should still see interest rates peaking soon and it is hard to see China’s regulation tightening further,” he said.
Chan Ho-him in Hong Kong