MR CHAN KIN-POR (in Cantonese): Thank you, President. In recent years, the Hong Kong property and stock markets have been weak. The property market has fallen for two consecutive years and the cumulative decline has reached 20%. The situation of the stock market is even more miserable. The Hang Seng Index has fallen for four consecutive years and the cumulative decline has reached 50%. However, although Hong Kong is facing new problems, there is no systemic risk. Mainly due to the impacts of geopolitics and the continuous oppression of the country and Hong Kong by Europe and the United States, international investors have doubts about the Hong Kong economy, directly causing shrinkage of the Hong Kong market. At present, the country is constantly striving for self-improvement, responding to oppression with strength, making every effort to promote industrial development, and has made remarkable achievements in many projects. For example, an electric vehicle brand in China has recently become the world’s number one in sales. I believe that the country will soon be able to lead us out of the prevailing haze. So long as Hong Kong does a good job under “one country, two systems” and solves the transformation problem with innovative thinking, it will keep on shining.
Thank you, Dr CHOW Man-kong for proposing this motion, which allows this Council to discuss this issue. First of all, I must say that there are no major problems with the economies of the country and Hong Kong as a whole, and the economic growth rate last year was forecast to reach 5% and 3%, basically positive. However, the Hong Kong stock market is in a very unreasonable state, many companies are paying dividends of 8% to 9%, and for many powerful companies, the price-to-earnings ratio has fallen from more than 10 times to only 3 to 4 times, and many others still have substantial net asset values, and the valuation is at a significant discount to the net asset value. These figures show that the Hong Kong stock market is so out of touch with reality, no wonder some companies keep buying back their shares.
In a free market environment, unrealistic stock prices cannot exist forever; as long as Hong Kong can preserve its strength and continue to improve itself; when unfavourable factors subside, the stock market will quickly return to its true value. Another issue worth paying attention to is that, in recent years, it has been easier for Hong Kong stock prices to decrease than increase, which has attracted many international speculators to short-sell Hong Kong stocks to gain profits, adding to the woes of the Hong Kong stock market. Information shows that, in recent years, the average daily short-selling ratio of Hong Kong stocks has risen from more than 10% in the past to 20%, and even as high as 27%. Hong Kong is a free market; we should not interfere as long as speculation is within the boundaries of the law. However, the Government should closely monitor the situation.
Some suggested the abolition of the stamp duty on stock transfers but I have reservations about this measure. In the year 2022-2023, the Government’s stamp duty revenue from shares reached $53.1 billion, accounting for 9% of its annual revenue. The abolition of the stamp duty on stock transfers will have a limited effect in stimulating the stock market, and after the abolition of stamp duty, the Government will not have any revenues even if transactions increase, so it is necessary to face up to the $50 billion reduction in revenue. How can we make up for the $50 billion? This is a critical factor that warrants careful consideration.
As for the property market, although the cumulative decline has reached 20%, frankly speaking, it is still not easy for young people to buy homes. Their desire to buy homes is very strong, and the Government should give a helping hand to young people entering the market. For young people buying lower-priced properties, the loan-to-value ratio for residential properties is 70%, they can even borrow up to 90% under the Mortgage Insurance Programme. Nevertheless, they have to pass the stress test after all, which is a big hurdle for young people with lower incomes. Therefore, the Government should consider adjusting the loan-to-value ratio and stress test for first-time home buyers and young people with stable jobs, and it should also consider relaxing the ad valorem stamp duty again. Currently, first-time buyers are only required to pay $100 for tax when buying residential properties valued at $3 million or less. The Government can consider allowing young people to pay only $100 for tax when buying residential properties priced at $4 million, thereby providing them with an opportunity to acquire their first homes.
President, there are strong economic ties between the country and Hong Kong. Currently, to cope with international challenges, the country is constantly making self-improvements, including deleveraging in the financial market, rectifying non-performing assets, and making the market more stable and reliable, in a bid to withstand the pressure of the international trade war and the financial war. However, these measures have also slowed down economic growth; as a result, people only want to save and they do not want to invest or spend; thus, the public’s total savings hit new record highs. It has now accumulated to a staggering level of RMB130 trillion and bank deposits in Hong Kong have reached $16 trillion. It is believed that substantial savings will be released upon the completion of various projects by the country and the normalization of US-China relations, leading to explosive growth in the country’s economy, which will subsequently benefit the Hong Kong stock and property markets.
Thank you, President.