CBN丨Hong Kong releases 2025-26 budget, pushing for AI and expediting tech listings

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Hong Kong stocks rallied on Wednesday after the Financial Secretary Paul Chan Mo-po proposed multiple measures to support the city's tech sector and set up a new channel to fast track tech listings in his latest budget speech.

As the nation affirmed the positioning of scientific and technological innovation as a core area of development, the edge of “one country, two systems” and the city's internationalized characteristic will be leveraged to develop Hong Kong into an international artificial intelligence (AI) exchange and cooperation hub, Chan said on Wednesday while delivering the 2025-26 budget.

Chan announced that HKD1 billion had been set aside for the establishment of the Hong Kong AI Research and Development Institute as he referred technological innovation as the city's “core engine.”

Total HKD100 million had been set aside for a scheme benefitting some 400 enterprises. Chan said funding of up to HKD250,000 each on a one-to-two matching basis will be made available to enterprises to introduce smart and advanced technologies into existing production lines.

Meanwhile, Hong Kong seeks to leverage its strategic positioning as the "three centers and a hub" with a special focus on the Association of Southeast Asian Nations (ASEAN) and the Middle East with the Hong Kong Stock Exchange (HKEX) set to step up promotion there.

Chan said the government will regularize the issuance of tokenized bonds. The linkage of faster payment systems between the mainland and Hong Kong is expected to be launched in the middle of this year.  

The third InnoHK cluster is envisaged, he said, focusing on research in advanced manufacturing, energy and materials development. This apart, HKD3.7 billion has been allocated to the Hong Kong Park of the Hetao Cooperation Zone, which upon completion is expected to generate 52,000 job opportunities and contribute HKD52 billion to the Hong Kong economy annually.

Chan also proposed a a dedicated "technology enterprises channel" on the stock exchange to expedite listings of tech companies. The channel will facilitate specialist technology and biotechnology companies' listings in Hong Kong, particularly those already listed in the mainland, Chan said.

The market's watchdog Securities and Futures Commission is working with the exchange to enable a smoother application process, he added.

As for the city's economy, Chan announced a "reinforced version" of the government's fiscal consolidation program.

With the city’s budget deficit in the red for the third year in a row, the financial secretary said the level of deficit will decline year‑on‑year from 2026‑27 onwards. He said the 2024‑25 revised estimate on total government revenue was HKD559.6 billion, lower than the original estimate by 11.6 percent. Hong Kong will record a deficit of HKD87.2 billion for 2024-25, Chan said, with fiscal reserves estimated to drop to HKD647.3 billion by the end of March.

Chan forecast that Hong Kong's economy will continue to grow moderately this year, rising by 2-3 percent in real terms for the year and by 2.9 percent a year in real terms from 2026 to 2029.  The average underlying inflation rate was forecast to be 2.5 percent a year.

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