Hong Kong Business News

Measures are in the pipeline to boost the liquidity of the stock market and inject additional funds to support small and medium enterprises, Financial Secretary Paul Chan announced in his 2024-25 Budget speech.

He pointed out that the Government has created favourable conditions for recovery.

Property Market

Concerning the residential property market, one such example includes when the Government announced, on October 25 last year, the adjustment of demand-side management measures for residential properties.

The relevant adjustments included shortening the applicable period of the Special Stamp Duty (SSD) from three years to two years, reducing the rates of the Buyer’s Stamp Duty (BSD) and the New Residential Stamp Duty (NRSD) by half, and introducing a stamp duty suspension arrangement for incoming talents’ acquisition of residential properties.

Among such measures, the stamp duty suspension arrangement has been well received, with over 500 applications approved. Mr Chan described it as a testament to the appeal of Hong Kong for overseas talent.

“We have been keeping a close watch on the residential property market. After prudent consideration of the overall current situation, we decided to cancel all demand-side management measures for residential properties with immediate effect, that is, no SSD, BSD or NRSD needs to be paid for any residential property transactions starting from today.

“We consider that the relevant measures are no longer necessary amidst the current economic and market conditions.

“The Hong Kong Monetary Authority (HKMA) adjusted the countercyclical macroprudential measures for property mortgage loans in July last year.”

Taking into account the external and local economic situation, Mr Chan said the Government considers that there is now room to make further adjustments to the relevant measures and other supervisory policies pertinent to property lending where appropriate, under the premise of maintaining the stability of the banking system.

He added that the HKMA will make announcements later today.

Stock Market

With respect to the stock market, Mr Chan noted that during the past year, the Government has made good progress in developing it.

“We joined hands with regulators and Hong Kong Exchanges & Clearing (HKEX) in implementing a number of measures, including establishing the listing regime for specialist technology companies and the Hong Kong Dollar – Renminbi Dual Counter securities model.

“Regarding attracting overseas enterprises to be listed in Hong Kong, HKEX has included the Saudi Arabia and Indonesia stock exchanges in its list of Recognised Stock Exchanges last year, which facilitates enterprises primary listed on the main market of these exchanges to seek secondary listing in Hong Kong.”

He explained that the Government is ardently taking forward recommendations by the Task Force on Enhancing Stock Market Liquidity.

“We are actively implementing measures proposed, last October, by the Task Force on Enhancing Stock Market Liquidity. They include reforming the Growth Enterprise Market. The HKEX has consulted the market on such initiatives as introducing a treasury share buy‑back regime and maintaining trading operations under severe weather.  Both are targeted for implementation in the middle of the year.”

Additionally, the Securities & Futures Commission and the HKEX are considering an array of measures to boost market efficiency and liquidity.

Such measures include enhancing the listing regime which entails exploring and enhancing the process of price discovery in the initial public offering of shares and reviewing requirements for the public float of shares of listed companies to boost market efficiency.

Another measure will improve the transaction mechanism which calls for exploring reducing the minimum trading spread to narrow bid‑ask spreads, with the proposal to be submitted in the second quarter; enhancing stock-trading units adopted in the cash market as the next step; and making further adjustments to the position limits and margin requirements of derivative products to better meet risk-management needs.

Boosting investor services is an added measure. It will explore refining real‑time, market-data services, to provide investors with targeted services at a reasonable price.

The final measure concerns stepping up market promotion. As such, HKEX will strengthen the promotion of Hong Kong’s securities market through its overseas offices and deepen connectivity with the Middle East and ASEAN countries, to attract more issuers and capital.

The Financial Secretary emphasised that to further enhance market competitiveness, stamp duties payable on the transfer of real estate investment trust units and the jobbing business of option market-makers will be waived. It is estimated that this will reduce government revenue by about $1 billion annually.

Assisting Small and Medium Enterprises

Taking into consideration that the strength of Hong Kong’s economic recovery still requires consolidation and changes in market conditions, Mr Chan said the Government will help small and medium enterprises (SMEs) through different measures to tackle their capital-flow problems, tap into new markets and accelerate upgrading and transformation.

SME Financing Guarantee Scheme

“To assist SMEs in tackling their capital-flow problems, I will extend the application period for the 80% and 90% Guarantee Products under the SME Financing Guarantee Scheme for two years to the end of March 2026. The total guaranteed commitment under the scheme will increase further by $10 billion.

“In addition, I have instructed the HKMA to maintain close communication with banks and the commercial sectors, adopt an accommodating manner to help enterprises tide over their liquidity needs, and refrain from demanding repayment of loans due to a fall in collateral value.”

Digital Transformation

With regard to digital transformation, he stated that SMEs in the food and beverage industry and the retail industry will be invited to select suitable options among ready‑to‑use basic digital solutions and apply for subsidies on a matching basis early this year under the Digital Transformation Support Pilot Programme.

The solutions will focus on three areas such as digital payment and shopfront sales, online promotion and customer-management solutions. It is expected that at least 8,000 eligible SMEs will benefit from the pilot programme.

BUD Fund

Mr Chan stressed that the Government has been making continuous enhancements to the Dedicated Fund on Branding, Upgrading & Domestic Sales (BUD Fund) such as raising the cumulative funding ceiling per enterprise and streamlining application procedures.

“I propose to inject $500 million more into the fund to help SMEs boost their competitiveness and tap into Mainland and overseas markets. This includes the launch of “E‑commerce Easy” under the fund. It will provide support of up to $1 million per enterprise for implementing e‑commerce projects in the Mainland.”

Deduction of Expenses and Allowances under Profits Tax

The Government also proposes to introduce two enhancement measures for the deduction of expenses under profits tax. Mr Chan expounded on the move by saying profits-tax payers will be granted tax deduction for expenses incurred in reinstating the condition of the leased premises to their original condition.

“As regards the allowances for industrial buildings and structures as well as commercial buildings and structures, the time limit for claiming the allowances will be removed.

“This will allow the new owner to claim allowances for the property after a change of ownership, subject to factors such as the construction cost of the property and the balancing charge of its previous owner.”

Both enhancement measures will take effect from the year of assessment 2024-25.

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