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Heading Towards the New Year

We will soon bid farewell to 2024. Reflecting on this year, Hong Kong has steadily progressed amid ongoing changes and uncertainties in the external environment.

2024 in retrospect.

While the US entered a rate-cutting cycle in the second half of the year, the Mainland also introduced various policy measures to stimulate the economy and stabilise expectations. Alongside measures rolled out by the Central Authorities to support Hong Kong and the efforts by the Hong Kong Special Administrative Region (HKSAR) Government and various sectors, the atmosphere in the local asset market has improved. So far, the Hong Kong stock market has surged by around 18% this year, with the Hang Seng Index reclaiming the 20,000-point mark. Market turnover has also significantly increased, reaching a historic high of over HK$ 600 billion in a single day this October. The average daily turnover for this year thus far has surpassed HKD 132 billion, marking an increase of more than 25% compared to last year. The initial public offering (IPO) market has rebounded as well, with funds raised from new listings exceeding HK$ 80 billion, ranking fourth globally.

The financial services sector continues to thrive. For instance, in the asset and wealth management sector, the total assets under management surpassed US$ 4 trillion last year, with net fund inflows increasing by 3.4 times year-on-year. The family office sector is also expanding, with around 2,700 single-family offices operating in Hong Kong, over half of which manage assets exceeding US$ 50 million.

The property market has gradually stabilised in recent months, and the number of transactions has increased. In the first 11 months of this year, the average monthly number of residential property transactions was about 4,450, representing a year-on-year growth of 22%.

This year, the total number of Hong Kong companies with parent companies from the Mainland or overseas reached nearly 10,000, and the number of startups approached 4,700, both up by 10% year-on-year, achieving record highs. Applications from talent for coming to Hong Kong continued to grow, with around 410,000 applications received under various talent admission schemes over the past two years. Of these, over 260,000 applications have been approved, and around 170,000 individuals have already arrived in Hong Kong. These figures reflect the effectiveness of the HKSAR Government's initiatives to attract businesses and talent, as well as enhance external promotion. As more enterprises and top talent settle in Hong Kong, the demand for office and residential space is expected to rise.

Earlier, I went to the Hong Kong WinterFest and Christmas market organised by the Hong Kong Tourism Board and the West Kowloon Cultural District, celebrating the festive season with members of the public.

The retail and catering sectors still face relatively greater challenges. So far this year, the number of inbound visitors has exceeded 44 million, an increase of over 30% year-on-year. We anticipate even more visitors around New Year's Eve. Earlier this month, after the Central Government resumed and expanded the multiple-entry Individual Visit Scheme for Shenzhen residents, the number of Mainland visitors to Hong Kong has notably increased. The streets were bustling during the Christmas holiday, and that would provide support for the retail and catering sectors. Just yesterday, Hong Kong hosted its first pyrotechnics drone show in the West Kowloon Cultural District, attracting large crowds of residents and visitors. It further enhanced the festive atmosphere as the year is drawing to a close.

Over the past year, after we strengthened the defence in safeguarding national security, the society as a whole has focused on building a vibrant economy and advancing development. We made sustained and steady progress. Economic growth for the year of 2024 as a whole is projected at 2.5%, with unemployment rate remaining low at around 3.1%, moderate inflation, and real increases in employment earnings.

Looking ahead to 2025, uncertainties such as geopolitical tensions and a prolonged high-interest rate environment may bring volatility to the market. However, with the steadfast support from the Central Government and the ongoing efforts of the HKSAR Government over the years, Hong Kong has built up a robust economic foundation and strong market resilience. We will navigate changes and forge new paths in the evolving landscape. We will expedite our efforts in the following three areas:

1. Leveraging Hong Kong's unique advantages as an international city, we will enhance our connectivity with both the Mainland and the world to further solidify our role as a "super connector" and "super value-adder." Over the past year, the HKSAR Government has made great strides in encouraging Mainland enterprises to establish high value-added multinational supply chain management centres, corporate treasury centres, research and development centres, as well as regional and international headquarters in Hong Kong. These enterprises can capitalise on Hong Kong's strong international character and its common law system to expand their international presence. We have also been extending and deepening ties with overseas regions, focusing efforts on enhancing economic, trade and financial cooperation with emerging markets such as the Middle East, ASEAN and the Global South. Meanwhile, we have been strengthening our collaboration with traditional markets like Europe and the US. In the coming year, we will partner with cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and other Mainland provinces to "go global", and explore business opportunities together, maximising our collective impact.

2. We will strengthen investment in innovation and technology (I&T) in a systematic manner to accelerate the cultivation of new quality productive forces. This includes harnessing "patient capital" from the Hong Kong Investment Corporation Limited to guide and leverage market funds in support of the clustering and development of strategic industries. Over the past two years, the Office for Strategic Enterprises has attracted nearly 70 strategic enterprises to Hong Kong. They are expected to invest over HK$42 billion and create around 17,000 quality jobs over the coming year. These enterprises will also bring their upstream, midstream and downstream partners from their industry chains to Hong Kong. Next, we will take forward more innovative policies to enhance cooperation on the I&T front with Shenzhen and other GBA cities, fostering mutual benefits and economic development. Together, we will make greater contributions to the country's goal of high-level technological self-reliance.

3. In light of the profound restructuring of the global political and economic landscape, we will adopt a more comprehensive strategy to reinforce and enhance Hong Kong's position as an international financial, trade, and shipping centre, while promoting the city as an international hub for high-calibre talent. For example, in the financial sector, we will continue to foster all-round development across various segments, including the stock market, bond market, insurance, private equity and venture capital, asset and wealth management, offshore Renminbi business, green finance, digital finance, and commodity trading. This will enable Hong Kong to better fulfill its comprehensive fund-raising functions, and serve the real economy. Hong Kong can play to its strengths in such areas as supporting the financing needs of high-quality I&T enterprises, promoting regional green transformation, and providing financial and other professional services to Mainland enterprises seeking international expansion.

As we approach 2025, with the solid support of our country, we will continue to pursue reform and innovation, and seize new opportunities. We will accelerate our integration into overall national development and proactively align with national development strategies. These efforts will enable Hong Kong to achieve greater progress in its economy, society and the livelihood of its people, thereby enhancing its appeal as Asia's World City.

December 29, 2024