Among the priorities covered by the budget, those on innovation, talents and financial markets should attract most investor’s attention, according to Patrick Ho, chief investment officer, North Asia, global private banking and wealth, HSBC.
Hong Kong plans to allocate HK$1bn ($130m) to set up an AI research and development institute, said financial secretary Paul Chan in his budget speech on Wednesday. The Hang Seng Tech index rose as much as 5.3% after the budget announcement, according to Bloomberg.
“With the recent capital market’s focus on AI, we think it is a good time to step up our efforts to develop AI and related industries in Hong Kong,” said Ho.
Ho favours AI enablers and adopters, including Chinese industry leaders in the internet, ecommerce, software, smartphones, semiconductor, autonomous driving, and humanoid robotics stocks in the Hong Kong market. He also backs beneficiaries of stronger corporate spending in AI infrastructure and applications.
In addition, the initiatives to expand the linkage with other overseas financial markets including the Middle East and new markets such as virtual assets will broaden investor choices and solidify Hong Kong’s status as an international financial centre, Ho noted.
Outside of tech, Ho sees tactical opportunities among undervalued high dividend stocks in the insurance, telecom, and utilities sectors among Hong Kong domestic companies, which are expected to perform well in the global rate-cutting cycle.”
Meanwhile, the Hong Kong Investment Funds Association (HKIFA) welcomed “the range of measures [for the asset and wealth management industry] that are covered in the Budget 2025-2026”.
“They bolster the key growth drivers for HK as an asset management hub so as to ensure we maintain our leading role internationally,” it said in a statement.
HKIFA believes that tokenisation “in the fund space and the offering of virtual-related assets” are an area that is poised to foster the development of new business models and expand the ecosystem. But it warned that the “robust development of the virtual space will hinge on the appropriate regulatory framework and infrastructure”.
In addition, it highlighted enhancements to the tax incentives for family offices and private funds and the clarifications on listed private equity funds which “are an important and a prudent step to enable the general public to have access to private assets”.
HKIFA was also reassured that the authorities will actively explore opportunities to introduce further expansion initiatives and extend the Greater Bay Area Wealth Management Connect Scheme.
