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The Hong Kong government has designated 1 billion Hong Kong dollars (US$128.67 million) to establish the Institute of Artificial Intelligence.
The city’s Finance Minister Paul Chan said in a budget speech Wednesday that the facility, known as the Hong Kong Institute of AI Research and Development, “led and supported Hong Kong’s innovative research and development and industrial applications of AI.”
Gary Ng, a senior economist at Natixis, believes that Hong Kong’s investment in innovation and AI is a positive move.
“Hong Kong is not that good at innovation…it’s like, how to really create new products. But… the AI industry is growing at a very fast pace. So for Hong Kong, it’s able to adapt to this new environment and try to be more Using AI in many places, including what we see in government, I think it’s definitely a positive signal,” he told CNBC.Road sign Asia” Wednesday.
Technology stocks rally behind the announcement, and the Hang Seng Tech index rose 4.49%.
The biggest gains in the conference include food delivery companies Meituan (up 9.21%) and e-commerce platforms JD.com (8.26%).
Meanwhile, the Hang Seng index rose 3.19%.
Chan attributed the improvement in sentiment in the asset market this year to central government measures to support Hong Kong’s capital market and the U.S. cut cycle.
“The stock market price and turnover volume are rising,” he said, adding that the Hang Seng index grew 18% that year, while the average daily turnover increased by 26%. He added that the funds raised from the new listing increased to HK$88 billion.
Chen predicts that from 2026 to 2029, Hong Kong’s economy will grow at an average annual average rate of 2.9% and the base inflation rate will be an average of 2.5%.
But Natixis’ NG said the economic growth forecast was “too optimistic”.
“In the short term, we still see this uncertainty in the global interest rate environment. In fact, there are still many geopolitical tensions that may actually affect our Hong Kong trade flows,” he said, “Others he outlined out Concerns include more trade restrictions from the United States and other countries.
NG estimates that Hong Kong’s economy will grow at 2% this year and in the long run.
Financial consolidation
From now until 2027/28, Hong Kong aims to reduce public recurring spending by 7% to address its growing deficit.
“This provides us with a clear path to restore the fiscal balance in the operating account in a planned and progressive way,” Chen said in his speech.
This is because government revenues at Asian financial centers have dropped significantly over the past fiscal years. Land sales have always been a key source of revenue for the government and contributed To more than 20% of the vault One number is now down to about 5%Reuters report.
Natixis’ NG hopes the government will focus on fiscal consolidation by limiting spending and moderately increasing revenue.
He added: “This will be the direction we may continue to see in the coming years as Hong Kong’s fiscal deficit problem is increasingly structured.”
