Hong Kong Monetary Authority: It is expected that the Hong Kong economy will experience moderate growth in 2026, with a forecasted real GDP growth of 2.5%-3.5%.

On March 30th, the Hong Kong Monetary Authority released the "Half-Yearly Report on Currency and Financial Stability (March 2026 issue)". The report indicates that the Hong Kong economy is expected to grow moderately in 2026. Expectations for commodity exports will continue to benefit from the artificial intelligence investment boom and the truce in the US-China trade war. Meanwhile, with the continued hosting of large-scale events and government measures to revitalize the tourism industry, tourism in Hong Kong is expected to steadily increase. These developments, coupled with strong financial market activity, are expected to further enhance service exports. Local demand is also expected to rise. Specifically, following the truce in the US-China trade war, the business environment has improved, driving growth in private investment. Additionally, rising asset prices may help boost consumer sentiment and further stabilize private consumption. The Hong Kong government predicts a real GDP growth of between 2.5% and 3.5% for 2026. The report shows that global stock markets recorded gains during the review period; however, concerns about the high valuation of artificial intelligence-related companies and escalating geopolitical tensions have increased stock market volatility. The Hong Kong stock market achieved its best annual performance in eight years in 2025, with the Hang Seng Index rising by 27.8% during the year. However, due to uncertainties in the external environment, volatility in the Hong Kong stock market increased during the review period. Despite resistance, the Hang Seng Index still recorded a 6.2% increase from the end of August 2025 to the end of February 2026. In March 2026, military conflicts in the Middle East led to increased global stock market volatility, including in the Hong Kong market. The issuance amount of Hong Kong dollar-denominated debt securities increased by 16.6% year-on-year in 2025, mainly driven by issuers outside of Hong Kong. Offshore RMB-denominated debt securities issued in Hong Kong also expanded during the year. Looking ahead, the strong momentum in the issuance of Hong Kong dollar-denominated debt securities is expected to continue in the short term, while improvements in market depth could potentially boost demand from issuers and investors in the long term. The issuance of offshore RMB-denominated debt securities will be influenced by the trends in USD and RMB interest rates, and the growing demand from global investors for diversified investments is expected to support the long-term development of Hong Kong's offshore RMB bond market. During the review period, authorities introduced several policy measures to promote the development of the Hong Kong bond market. Several milestones were achieved in bond issuance, consolidating Hong Kong's position as a global leader in sustainable finance, a leading international bond issuance center in Asia, and a major offshore RMB business center. Benefiting from improved sentiment in the property market, robust trading, and stabilizing property prices, the residential property market in Hong Kong continues to recover. In the short term, the property market is still affected by various uncertainties, but the government's ongoing efforts to attract talent, investors, and students are expected to continue to support residential demand. Meanwhile, the commercial property market continues to face challenges, but Grade A office buildings have begun to show signs of improvement. Overall, the gross operating profit of retail banks in Hong Kong increased by 1.4% in the second half of 2025, mainly driven by increases in net interest income, fee and commission income. However, some of these gains were offset by decreases in foreign exchange and derivative business income. The total amount of loans and advances granted by recognized institutions decreased slightly by 0.2% in the second half of 2025. Nevertheless, the total amount of loans recorded a positive growth of 2.3% in the full year of 2025, reversing the 2.8% decline in 2024. Although specific loan classification rates increased slightly in the second half of 2025, overall asset quality risk in the banking industry remains manageable, with adequate provisions. In general, the Hong Kong banking sector maintains high liquidity and ample capital. In the fourth quarter of 2025, the average liquidity coverage ratio for Category 1 institutions was 165.6%, well above the statutory minimum requirement of 100%. As of the end of 2025, the total capital ratio of locally registered recognized institutions was 25.1%, significantly exceeding the international minimum requirement of 8%.