Deepening financial innovation, activating industrial momentum! Deloitte interprets Hong Kong's latest Policy Address.

On September 16, the Chief Executive of the Hong Kong Special Administrative Region simultaneously released the first Five-Year Plan and the fifth Policy Address of his term. Deloitte China Southern Region Managing Partner Au Chun Hing said that the Policy Address proposes a series of measures to deepen financial market development, covering market systems, financial products, fintech, and international connectivity, reflecting that Hong Kong is further enhancing its capital market competitiveness across multiple dimensions, including market scale, institutional efficiency, product innovation, and international connectivity. This also aligns with Hong Kong's first Five-Year Plan, which sets out the development direction of enhancing the depth, breadth, and liquidity of the stock and bond markets, as well as giving play to the function of financial services in serving the real economy. Au Chun Hing pointed out that in terms of financial innovation, the government proposed the regular issuance of digital bonds, exploring the application of different digital currencies across the full cycle of bond interest payments and redemptions, and further developing tokenization and digital asset infrastructure. In the next stage, what is worth watching is how to gradually connect different pilot programs into a market ecosystem with scale, including legal and regulatory frameworks, settlement, custody, accounting, and cross-border interoperability, so that fintech can further transform from innovative applications into financial infrastructure that improves market efficiency. In enhancing capital market competitiveness, streamlining prospectus disclosure requirements, expanding listings in Hong Kong by overseas enterprises from Southeast Asia and Belt and Road countries, optimizing the listing regime and the 18C listing regime for specialist technology companies, and advancing T+1 settlement will all help improve market efficiency and international competitiveness. On this basis, post-listing liquidity should also be further enhanced, including price discovery, securities lending, market-making mechanisms, and research coverage, so that the IPO advantage can be transformed into a deeper and more vibrant secondary market. In terms of products and asset allocation, developing more thematic equity indices, bond and commodity indices, ETFs, and derivative products, and advancing REIT Connect will help enrich the product ecosystem of Hong Kong's financial market. The next step can be to simultaneously expand the investor base, enhance product liquidity and market participation, and further consolidate Hong Kong's important position as a platform for global investors allocating to China and ACR HOLDINGS. Au Chun Hing said: "Looking ahead, Hong Kong's international financial center can focus on three outcomes: being more international, more deeply developed, and more trusted, and more effectively giving play to the function of financial services in serving the real economy, more closely connecting capital market advantages with technological innovation, green development, trade, and industrial upgrading, and transforming financial advantages into momentum for economic growth." Deloitte China Hong Kong Government and Public Services Industry Leader Lui Chi Wang said: "The key to the development of Hong Kong's gold market lies in the coordinated enhancement of warehousing, pricing, settlement, and the design of gold-related products. Through the central gold clearing system and tokenized warehouse receipt financing, enterprises can obtain faster settlement and more flexible capital turnover, while also improving transparency and risk management. As connectivity with the Shanghai Gold Exchange and the Shanghai Futures Exchange deepens, Hong Kong can also further enrich RMB-denominated and RMB-settled commodity futures and options varieties, promoting the internationalization of RMB-denominated products." Lui Chi Wang pointed out that in "finance + technological innovation," promoting the practical application of tokenization technology across multiple asset classes and use cases through the HKMA's Ensemble project will help Hong Kong's digital asset market become more mature and align with traditional markets such as securities, bonds, and fixed income. At the same time, advancing "finance + intellectual property" is also crucial. Through the intellectual property financing sandbox, intellectual property such as patents and copyrights will be incorporated into the financial services system, and cross-sector support will be provided in conjunction with professional services including banking, insurance, valuation, legal, and accounting, helping the value of intellectual property be effectively transformed into new types of financing assets. Deloitte China Hong Kong Tax and Business Advisory Leader Liu Ming Yang said: "We support the strategic tax measures proposed by the government in the latest Policy Address. These measures are aimed at attracting high-value-added enterprises and enhancing Hong Kong's competitiveness in the global asset and wealth management industry. The government continues to optimize the preferential tax regimes for funds, single-family offices, and carried interest. Deloitte looks forward to the relevant bill being smoothly passed into law in the near term. This will effectively attract more overseas family offices and large well-known fund managers to relocate their businesses to Hong Kong or expand their operations in Hong Kong, and further drive Hong Kong's sustained economic growth and demand for professional services." Liu Ming Yang pointed out that Deloitte supports the Policy Address's proposal to implement in the first half of 2027 stamp duty exemption on transfers of non-residential properties for proposed REIT listings, enhancing flexibility in establishing and preparing REITs for listing. At the same time, it is hoped that the relevant policy can further expand its scope of application, so that Hong Kong companies holding non-residential properties may also enjoy stamp duty exemption when transferring company equity if specific conditions are met, thereby more comprehensively revitalizing the local non-residential property market. The government has continued the dedicated preferential policy package for the Northern Metropolis proposed in last year's Policy Address, covering land grant arrangements, financial support, and tax concessions, providing a highly competitive tax rate of 5% or half rate (8.25%) for individual enterprises in key industries and regional headquarters such as finance, advanced manufacturing, scientific research, logistics, and supply chain management. The Policy Address also places significant emphasis on developing supply chain management and procurement businesses, which aligns with Hong Kong's strategy of building a "high-value-added supply chain service center," aiming to attract more enterprises to establish a presence in Hong Kong and international organizations and multilateral institutions to set up regional headquarters in Hong Kong. Deloitte looks forward to the government announcing more specific details of the preferential policy package and will continue to provide professional support to enterprises in enjoying tax incentives. Deloitte China Strategy and Economic Advisory Partner Jiang Weixuan said: "The government's integrated planning of the Northern Metropolis development with higher education and the innovation and technology industry is forward-looking in direction. The three university towns are planned according to the 'one town, five elements' approach, with campus areas, technology areas, industry areas, and living communities implemented in a coordinated manner, and Ta Kwu Ling further incorporating artistic and blue-green elements. Their value lies not only in the educational space itself, but also in bringing enterprises, talent, and immediate demand into the parks through flows of people, knowledge, and innovation, significantly shortening the development cycle of industrial parks and providing a starting point for the overall ecosystem." Jiang Weixuan pointed out that in terms of new industrialization, the "three major innovation and technology parks, five major research and development institutions," as well as platforms such as San Tin, Hung Shui Kiu, and Sha Ling, have built a complete vehicle chain from basic research to pilot testing and then to mass production. The key next step is to promote "industry PPP" in fields with high capital and technological thresholds, such as shared pilot production line facilities. The government acts as a co-investor and risk sharer, park companies are responsible for operations, and enterprises use them on demand. This shifts PPP from infrastructure delivery to industry-oriented development, and from building and leasing to capability sharing, becoming a new paradigm for public-private cooperation. The allocation of university town land should embed an industrial contribution score, shifting competition among institutions from rankings to the ability to organize industrial ecosystems. The Northern Metropolis should also become a two-way go-global platform, providing cross-border compliance, intellectual property, and international market connectivity. He emphasized that the success of the Northern Metropolis does not lie in how much serviced land is released, but in whether a complete industrial ecosystem can be formed. The university town is the traffic engine, and industry-oriented PPP is the new cooperation paradigm.