HK Proposes Higher Spending

123jump.com Staff
25 Feb, 2009
New York City

Hong Kong government proposed a raft of tax subsidies to individuals, increase education spending and provide funding for job retraining in its latest budget proposal. The increased spending will drive the budget deficit higher. HK estimated economy to shrink between 2% and 3% in the current year.

[R]6:00AM New York, 6:00PM Hong Kong - Hong Kong government proposed a raft of tax subsidies to individuals, increase education spending and provide funding for job retraining in its latest budget proposal. The increased spending will drive the budget deficit higher but the government estimated economic to shrink between 2% and 3% in the current fiscal year.[/R]

Hong Kong stocks gained on speculation that the U.S. economy may recover in 2010.

In Hong Kong trading Hang Seng Index rose 1.6% or 206.56 to 13,005.08, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, advanced 1.6% or 115.51 to 7,183.71. In Shanghai trading CSI 300 Index edged up 0.1% or 240 to 2,304.25.

Daily turnover on main-board rose to HK$37.3 from HK$37 billion yesterday.

HK’s Economy Grows 2.5% in 2008

Hong Kong financial secretary John Tsang announced today in his annual budget plans to create jobs and support employment, increase overall competitiveness and facilitate a return to economic growth.

In 2008 the economy grew at 2.5% and shrink be between 2% to 3% in 2009.

Tsang says the government will increase public government spending to more than HK$300 billion next year and aims to create 62,000 jobs and internship opportunities.

In order to ease financial burden on the public, Hong Kong will provide one time personal income tax reduction of up to HK$6,000 to nearly 1.4 million taxpayers.

There will be a rates waiver for the first two quarters of the fiscal year up to a maximum of HK$1,500 per quarter at a cost of HK$4.2 billion to the treasury.

HK is also considering extending the freeze on government fees and charges related to the people’s livelihood.

According to Tsang, there will be a HK$400 million package for the Labour Department to provide more training and job opportunities, and HK$13 million in additional funding for the department to help people who have lost their jobs recently.

An estimated HK$140 million has been earmarked to help new graduates entering the job market this summer through a new internship program, and HK$1.1 billion to provide jobs in various sectors.

The government will spend HK$61.7 billion on education in the current fiscal year.

The financial secretary extended the exemption for First Registration Tax on electric vehicles for five years and will lead a steering committee to study the wider use of electric cars in Hong Kong.

Hong Kong forecasts a deficit of HK$9.8 billion in the operating account and a deficit of HK$39.9 billion in the consolidated account in the current fiscal year ending in March 2010.

Gainers & Losers

Hong Kong stocks rose on strong investor sentiment after U.S. Federal Reserve Chairman Ben Bernanke said the U.S. economy might rebound in 2010. Bernanke also indicated that the government currently has no appetite to nationalize banks.

Financial stocks gained. HSBC jumped 2.7% to HK$55.10, Wing Hang Bank rose 2.8% to HK$41.05 after a report that showed that China Life Insurance last year proposed to buy a 10% stake in the bank from the Bank of New York’s subsidiary.

China Life gained 3.1% to HK$3.98 and Ping An Insurance edged up 5.6%.

PCCW fell 2.5% to HK$3.89 after the High Court deferred the first hearing of its HK$2.2 billion privatization plan to April 1.

Melco International jumped 9.8% to HK$2.36 after the associate company Melco Crown Entertainment Ltd revenues gained 41% on improved performance at its Crown Macau casino.

Li & Fung soared 4% to HK$17.90 after purchasing Liz Claiborne's sourcing operations for $83 million.