In the Media

As an international financial center, Hong Kong has long played a significant role in global capital markets. However, in recent years, the local stock market has faced mounting challenges. Market performance has remained sluggish and the IPO market has experienced a concerning downturn, significantly reducing market activity. Liquidity issues have become increasingly pronounced, driven by an outflow of foreign capital and a decline in local trading activity that together undermine market stability. The trend of foreign capital outflows not only indicates external investors' negative expectations of the market but also reflects the challenges posed by geopolitical and economic conditions to Hong Kong's status as a global financial hub. What are the solutions that can revitalize Hong Kong’s stock market and restore investor confidence? Prof. Chen Lin and Dr. Shihua Qin explore the potential solutions which include attracting more investors and leading companies from the Middle East and Southeast Asia, lowering the threshold for the Shanghai-Hong Kong Stock Connect to enhance liquidity, launching government-guided investment funds and optimize the Mutual Recognition of Funds between mainland China and Hong Kong, promoting High-Frequency Trading, facilitating innovative technology firms to list on the Hong Kong Stock Exchange, lowering investment thresholds to broaden the investor base and strengthening regulatory oversight and corporate governance for better investor protection.

Donald Trump is set to return as President of the United States, ushering in the era of Trump 2.0. His new agenda focuses on tax cuts, reducing trade deficits, and limiting immigration. Trump aims to maintain low tax rates and has proposed a revamped tax structure in his "2025 Plan," which could worsen income inequality. Dr. Luk noted that while Trump's tax policies may stimulate the economy, they could also increase national debt and impact social welfare spending, thereby challenging government operations.

As Hong Kong faces an ageing population alongside a low birth rate, many retirees find themselves financially unprepared. Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, shared his thoughts at the Asian Financial Forum (AFF), pointing out that “The subscription of pension life insurance products in Hong Kong is actually very small.” He further noted that the city’s Mandatory Provident Fund (MPF) can cover only around 40% of pre-retirement income, leading to a significant quality-of-life downgrade. With the city's public health system becoming increasingly crowded and private services costly, the Greater Bay Area (GBA) offers a promising alternative where living and healthcare costs are significantly lower. Prof. Tang also stated, “We started seeing a lot of Hong Kong people going north to consume... but increasingly more people are also going up for very generic medical and dental services.” He suggested that one potential path is to develop insurance products to cover citizens when they retire in the Greater Bay Area.

【𝗛𝗼𝗻𝗴 𝗞𝗼𝗻𝗴 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗣𝗼𝗹𝗶𝗰𝘆 𝗚𝗿𝗲𝗲𝗻 𝗣𝗮𝗽𝗲𝗿 𝟮𝟬𝟮𝟓 – 𝗖𝗵𝗮𝗽𝘁𝗲𝗿 𝟭】 The first chapter, written by Prof. Yang Liu, examines Hong Kong’s fiscal deficits. In recent years, fiscal deficits have emerged as a significant new challenge for the Hong Kong government, with the deficit levels reaching record high and ranking among the top in developed economies. The analysis finds that a significant portion of this deficit stems from structural deficits, which cannot be passively alleviated by economic growth alone but require proactive fiscal policy adjustments. While land revenue contributes a substantial proportion of fiscal income, its volatility also poses high risks, having driven most revenue fluctuations. More prudent risk management is therefore necessary. Looking ahead, the government must strike a balance between reducing deficits and implementing fiscal policies. Indeed, the government has actively adjusted fiscal policies. On the other hand, Hong Kong has accumulated substantial fiscal reserves over the years. Despite a decline in recent years, these reserves remain among the highest globally, with limited downside risks. Meanwhile, the government should consider making full use of the government bond program's capacity to raise funds for infrastructure investment. This approach would not compromise long-term fiscal sustainability but foster the development of capital markets and the internationalization of the renminbi.

The Hong Kong government is expecting a deficit of nearly HK$100 billion for the current year, significantly higher than the initial estimate of HK$48.1 billion made last February. The IMF has highlighted the necessity for Hong Kong to enhance its tax revenue to address increasing spending pressures linked to an ageing population. Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, supports raising revenue either by raising tax rates or by broadening the tax base to address the issue of possible structural fiscal deficits. He highlighted a “mental trap” among government officials who believe that higher taxes would harm productivity, and he pointed out that Singapore’s implementation of a goods and services tax (GST) did not hinder productivity in the medium run. He stated, “Broadening the tax base, especially introducing the sales tax, will be a one-way street,” emphasising the need for sustainable revenue sources as government expenses grow.

In the first half of 2024, fatal industrial accidents in Hong Kong increased compared to the previous year. Many of these accidents occur in the construction and manufacturing sectors, often involving hazardous materials and falling objects. Critics argue that the pressure to meet deadlines leads companies to overlook essential safety measures, and that enhancing safety protocols could prevent most accidents.

In the digital age, traditional public services face significant challenges, including inefficiency and outdated information. Large language models (LLMs), while impressive, struggle with "hallucinations" (generating fluent but incorrect responses) and a lack of domain-specific data, making them inadequate for high-accuracy demands. To address these issues, the Retrieval-Augmented Generation (RAG) framework has emerged as a transformative solution, offering greater accuracy and efficiency.

Prof. Shipeng Yan and Ms. Runjia Zhang used Tencent’s “AI Corpus for good” and Ant Group’s “Blue Vest social good campaign” as case studies for top digital companies' practices in helping the elderly. They advocate for digital companies to understand the needs of the elderly through social cooperation and emphasize the importance of understanding their psychological characteristics to design products with emotional connection. At the same time, through education and social services, improve their digital literacy and awareness of fraud prevention. Let our seniors enjoy the convenience brought by technology safely and confidently!

Prof. Heiwai Tang, Associate Dean of HKU Business School and Director of the Asia Global Institute, pointed out that many mainland enterprises have sought to raise funds and "go overseas" through Hong Kong in response to the mainland's economic transformation and recent growth slowdown. He emphasised, "Mainland companies adopt a dual-headquarters concept, with many R&D and manufacturing headquarters in the Greater Bay Area, and their foreign trade and fundraising operations based in Hong Kong. This is because Hong Kong's international financial market can facilitate their business expansion."