Group 1 - The stock market in Hong Kong has shown strong performance, with the Hang Seng Index rising by 28% over the year, and the average daily trading volume increasing by 90% to nearly 250 billion HKD, setting a historical high [1][2] - The amount raised from new stock listings has more than doubled compared to 2024, exceeding 280 billion HKD, making Hong Kong the top global market for IPOs [1][2] - The residential property market has seen both price and transaction volume increase, with total transactions rising to nearly 63,000, the highest in four years, and property prices increasing by 3.3%, ending a three-year decline; rental prices also rose by 4.3% [1][2] Group 2 - The non-residential property market has rebounded, with a narrowing of rental and price declines [1][2] - The labor market has stabilized in the second half of the year, with the seasonally adjusted unemployment rate at 3.8% in the fourth quarter [1][2] - Employment income has continued to grow, with the median monthly income for full-time employees increasing by 4.2% year-on-year in the fourth quarter [1][2]

Core Viewpoint - Deloitte estimates that Hong Kong's fiscal budget for 2025/26 will be approximately balanced with a surplus of HKD 15.6 billion, and the fiscal reserves are expected to reach around HKD 669.9 billion by March 31, 2026, reflecting a year-on-year increase of 2.4% from HKD 654.3 billion last year [1] Group 1: Fiscal Proposals - Deloitte suggests developing the Northern Metropolis as a new growth engine for Hong Kong, proposing investment tax credits and subsidies for businesses investing in the area, as well as a 150% special tax deduction for interest expenses and professional fees related to bonds issued for supporting the development [1] - A dedicated tax framework is recommended for the Hong Kong-Shenzhen Innovation and Technology Cooperation Zone, extending tax incentives to activities in the Shenzhen area [1] Group 2: Tax Optimization and Dual Listing - Recommendations include optimizing tax policies to promote dual listings and capital investment, such as providing a "safe harbor" for companies dual-listed in Hong Kong and reducing the stamp duty rate on transactions involving dual-listed company shares by 0.05% [2] - The proposal to change the interest expense deduction condition from "actual taxation" to "applicable tax rate" standard for Corporate Treasury Centers (CTC) and provide unilateral tax credits for CTC income [2] Group 3: Financial Services and Wealth Management - The expectation to maintain Hong Kong's competitive advantage as a regional asset and wealth management center includes offering preferential tax regimes for eligible fund managers, reducing the profits tax rate to 8.25% [2] - Additional recommendations include tax incentives for licensed digital asset market participants and single-family offices, as well as enhancing the charitable ecosystem [2]