The 2025/26 Hong Kong Budget: How It Will Impact Your Business

The 2025-26 Hong Kong Budget outlines a strategic roadmap to sustain economic growth, enhance innovation, and reinforce the city’s position as a global financial hub. Despite global uncertainties, the budget presents opportunities for businesses and investors—from increased funding for innovation and technology to expanded IPO activities and financial reforms.

However, the Hong Kong Budget also emphasises fiscal consolidation alongside new incentives and support measures, with a 7% reduction in government expenditure by 2027-28. This signals opportunities and challenges for businesses looking to expand or invest in Hong Kong.

So, what does this mean for companies, startups, and investors? This article breaks down key highlights of the 2025-26 Hong Kong Budget and what businesses should consider when navigating the evolving economic landscape.

Economic Outlook and Fiscal Strategy: What to Expect from the 2025-26 Hong Kong Budget

The Hong Kong government projects GDP growth of 2-3% in 2025, with a medium-term forecast of 2.9% annual growth from 2026 to 2029. Inflation is expected to stay between 1.5% and 1.8%.

Key Fiscal Measures from the Hong Kong Budget:

• A reduction of 7% in government recurrent expenditure to restore fiscal balance.
• Expansion of bond issuance to support long-term development projects.
• Continued focus on investment in high-growth sectors like artificial intelligence (AI), fintech, and smart manufacturing.

Implications for Businesses & Investors:

• Businesses should prepare for a leaner public sector: Reduced government spending may affect industries reliant on public contracts.
• Investment opportunities in technology, green finance, and infrastructure will rise as the government shifts its focus towards high-growth sectors.
• Financial market liquidity and investment sentiment may improve, driven by economic recovery efforts and China’s continued economic support.

Innovation & Technology: Hong Kong’s Push for a High-Tech Future

The innovation and technology sector is one of the biggest winners in the Hong Kong Budget 2025-26. To position Hong Kong as a global AI and deep-tech hub, the budget introduces significant funding and policy enhancements.

Key Measures in Innovation & Technology:

• $10 billion I&T Industry-Oriented Fund to attract private sector investment in emerging technologies.
• Expansion of the AI Supercomputing Centre and establishing a Hong Kong AI Research & Development Institute ($1 billion allocated).
• New Industrialisation Acceleration Scheme to drive smart manufacturing and advanced semiconductor R&D.

Opportunities for Businesses & Investors:

• Tech startups and R&D firms can leverage increased government support to scale operations.
• Investors should focus on AI, biotech, and clean energy technologies, which are receiving significant government backing.
• Corporates should explore AI-driven digital transformation, as incentives are being introduced to encourage widespread adoption.

Financial Services & Capital Markets: Strengthening Hong Kong’s Global Position

The 2025-26 Hong Kong Budget reinforces Hong Kong’s role as an international financial hub, focusing on the expansion of capital markets and fintech development.

Key Financial Initiatives:

• Hong Kong ranked among the top 4 IPO markets globally, with an 88% year-on-year increase in fundraising.
• Expansion of offshore RMB liquidity and financial infrastructure to strengthen Hong Kong’s role as the primary offshore RMB trading hub.
• Regulatory support for tokenised bonds, stablecoins, and virtual asset developments.

Impact on Businesses & Investors:

• Wealth managers & asset management firms will benefit from enhanced financial market liquidity.
• Fintech and virtual asset startups should use new regulatory clarity to expand operations.
• Investors should explore opportunities in Hong Kong’s expanding capital markets, particularly in IPOs, structured products, and alternative investments.

Northern Metropolis & Real Estate: New Development Opportunities

The Hong Kong Budget 2025-26 heavily emphasises land development and infrastructure expansion. The Northern Metropolis, a strategic area connecting Hong Kong to the Greater Bay Area (GBA), is central to these plans.

Major Real Estate & Infrastructure Developments:

• Expansion of the Hetao Science Park, San Tin Technopole, and new data center clusters.
• Large-scale investment in cross-boundary transport links, including new railway projects.
• Increased housing and commercial land supply to stabilise property prices.

Business & Investment Implications:

• Real estate investors should monitor the Northern Metropolis for commercial and logistics property opportunities.
• I&T firms can take advantage of new incentives to set up regional R&D hubs and smart factories.
• Infrastructure and construction companies will see increased project opportunities.

Where To Next?

The 2025-26 Hong Kong Budget presents a mixed landscape of challenges and opportunities for businesses and investors. While fiscal consolidation may lead to tighter government spending, substantial investments in innovation, finance, and infrastructure create new growth avenues.

For businesses looking to expand in Hong Kong, now is the time to act—whether by tapping into I&T funding, entering the Northern Metropolis market, or leveraging Hong Kong’s status as an international finance hub.

However, navigating the Hong Kong business landscape can be complex, but InCorp is here to help. Whether you’re a startup, corporate investor, or SME, our business advisory experts can assist with company incorporation, tax compliance, and expansion strategies in Hong Kong and Asia-Pacific. Contact InCorp today to unlock new business opportunities in Hong Kong!