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The Hong Kong government has allocated 1 billion dollars from Hong Kong ($ 128.67 million) for the establishment of an artificial intelligence research institute.
Called AI Research and Development Institute of Hong Kong, the installation “will lead and support Hong Kong’s innovative R&D, as well as the industrial application of AI,” said the city’s financial secretary, Paul Chan, in his budget speech on Wednesday.
Gary Ng, a senior economist of Natixis, sees Hong Kong in innovation and AI as a positive movement.
“Hong Kong has not been so good in terms of innovation … as, how to really create a new product. But … the AI industry is evolving in a fairly fast rhythm. Therefore, in the case of Hong Kong, if he is able to adapt to this new environment, trying to use AI more, including what we see within the government, I think that is definitely a positive signal,” he told CNBC, “he said in CNBC,” he said in “CNBC” “. “Street Sigs Asia” On Wednesday.
Technology stocks were recovered at the end of the announcement, with the Hang Seng Tech index winning up to 4.49%.
Among the main winners of the session were the food delivery company Meituan (UP 9.21%) and Electronic Commerce Platform JD.com (8.26%).
Meanwhile, the Hang Seng index won up to 3.19%.
Chan attributed an improved feeling in asset markets this year in part to the central government measures to support the Hong Kong capital market and the United States rate reduction cycle.
“The stock market experienced increases in both prices and in the volume of billing,” he said, added that the Hang Seng index increased 18% during the year, while average daily billing increased by 26%. The funds raised by new lists increased to HK $ 88 billion, he added.
Chan expects Hong Kong’s economy to grow at an average rate of 2.9% per year in real terms from 2026 to 2029, and the underlying inflation rate is 2.5% per year, on average.
But Natixis’ NG says that the economic growth forecast is “too optimistic.”
“In the short term, we still see this uncertainty in the environment of the global interest rate. Actually, there are still many geopolitical tensions that can actually affect our commercial flows of Hong Kong,” he said. Other concerns described include more commercial restrictions from the United States and potentially other countries.
NG estimates that Hong Kong’s economy will grow at 2% this year and long term.
Fiscal consolidation
Hong Kong aims to reduce public recurring spending by 7% from now on to 2027/28 to address its growing deficit.
“It gives us a clear route towards the objective of restoring the fiscal balance in the operational account, in a planned and progressive manner,” Chan said in his speech.
That occurs when the Asian Financial Center saw a strong decrease in the income of the land sales government in the last financial year. Land sales have been a key source of income for the government and contributed more than 20% of the coffers, A figure has now plunged to approximately 5%Reuters reported.
Natixis’ NG expects the government to concentrate strongly on fiscal consolidation by restricting expenses and increasing income moderately.
“That will be an address that we will continue to see, probably in the coming years, because the problem of Hong Kong fiscal deficit is increasingly structural,” he added.
