Analysts say a plan to provide spending coupons to Hong Kong residents will help the city’s economy recover from the pandemic.
Paul Chan, the city’s financial secretary, said in his budget on Wednesday that HK $ 5,000 ($ 644) in electronic spending receipts will be distributed to 7.2 million residents.
“By encouraging local consumption, this measure is expected to facilitate the development of a digital economy and deliver estimated GDP growth of more than 1 percent,” said Agnes Chan, managing partner of EY, Hong Kong and Macau, noting similar schemes in Macau. and Taiwan.
Anne Ling, stock analyst at Jefferies, said the estimated HK $ 36 billion in coupons represents 9 percent of retail and catering spending in 2020.
“We assume that everything will be spent in retail and hospitality. However, it can also expand the scope of business types such as services, hotels, etc. ”, said Ling.
Ling added that with unemployment at 7 percent for nearly 17 years, spending is likely to be focused on needs.
Paul Ho, partner at Ernst & Young Tax Services, said the increase in stamp duty on share transfers from 0.1 percent to 0.13 percent, which caused stocks on the city’s stock exchange to drop sharply, will have no long-term effect.
“Such a rise should have no long-term impact on the competitiveness of the HK stock market, as the price can be adjusted according to market conditions and the general economic environment,” he said.
Economists at Citi viewed the budget as “cautious but expansive” and raised their forecasts for economic growth to 4 percent for 2021 and 2 percent growth for the first quarter following the relaxation of social distancing measures.
The city’s economy shrank by 6.1 percent year-on-year in 2020.