Property investors were some of the biggest winners from Hong Kong’s Budget 2024. Will we also see a boost to the wider Hong Kong stock market?
▪️Buy-side tightening measures for residential properties, including Special Stamp Duty, Buyer’s Stamp Duty, and the New Residential Stamp Duty, were all abolished with immediate effect. HKMA also moved to enable investors to borrow more.
▪️This should help to revitalise the sector, which has seen sales fall by 40% and prices dip almost 20% since 2021.
▪️The Hong Kong stock market has been highly correlated with the residential property market, so a boost to property could have a knock on effect for wider investors.
▪️This Budget also gave Hong Kong REITS a boost to competitiveness, with the waiving of stamp duties payable on the transfer of REIT units.
This is encouraging for investors who want to benefit from the upside of a rising property market without actually buying property.
Investable income
▪️With retail investors in mind, we always hope to see measures that will increase – or at least not reduce – investable income. There were a number of measures aimed at achieving this, such as a 100% salaries tax deduction, but the HK$ 3,000 cap is lower than last year. It was a similar story for other relief measures, which the Financial Secretary Paul Chan acknowledged needed to be scaled back.
▪️In this context it was encouraging to see only a restrained salary tax increase. While progressive tax rates on salaries – which apply to most people and are already some of the lowest in the world – stayed the same, the Government introduced a higher tier of 16% for standard rate tax payers. However, this is just 1% above the 15% standard tax rate and will only apply to income over HK$ 5 million, so we do not expect it to have a significant impact on investments.
Boosting the local financial ecosystem
▪️It was also encouraging to see the Government taking steps to support Hong Kong’s role as a global finance centre. Measures such as preferential tax regimes for family offices will encourage more to set up locally, which will have positive effects to the wider financial ecosystem.
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