Hong Kong Budget [ROLLING HEADLINE]

MEASURES

• Expects fiscal deficit for FY to be HKD 139.1bln, accounting for 4.8% of GDP (A record)
• Hong Kong Government is to hand out HKD 10k to each permanent citizen aged 18 or older, accounts for HKD 71bln of announced measures (In-fitting with earlier reports)
• Hong Kong government announces HKD 120bln in fresh measures to bolster the economy
• Lower profit tax for companies lowered, government rents and rates reduced, electricity bills subsidised (SCMP)
• Profit reduction tax payable for 2019/20 by 100, capped at HKD 20k
• Monthly allowance of low income families doubled and fees waived for public examinations to get into universities (SCMP)
• Individuals will receive rebates in tax, government rates and a month’s rent in public housing; 100 per cent guarantee to Hong Kong companies taking low interest loan (SCMP)
• To issue iBonds and Silver bonds worth a minimum of HKD 13bln, and HKD 66bln in green bonds over the next five years
• To offer trial of fixed-rate mortgages to aid homebuyers
• Will allocate an extra HKD 700mln to tourism board
• Will earmark ~HKD 450mln to promote understanding of law

FORECASTS

• 2019/20 budget deficit forecast at HKD 37.8bln - forecasts fiscal deficit for the next five years
• 2020 GDP growth forecast between -1.5% To +0.5%
• Q4 GDP growth revised higher to -0.3% vs. Prev. -0.4%
• 2020 Headline Inflation forecast: 1.7%
• 2020 Underlying Inflation forecast: 2.5%
• Government revenue revised down by 9.4% to HKD 567.3bln

CORONAVIRUS

• Hong Kong Finance Secretary says the new coronavirus in Hong Kong could further weigh on economic sentiment, consumption and tourism-related activities, HK may face a worse fallout than SARS