Baby bonus, lowered stamped duty: Hong Kong Policy Address 2023
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Baby bonus, lowered stamped duty: Hong Kong Policy Address 2023

19 Nov
16 Nov

Hong Kong Chief Executive John Lee unveiled his second Policy Address at the Legislative Council on 25 October 2023. The 104-page report was centered around a few key overarching themes to boost the economy, foster the development and well-being of Hong Kong citizens, and to promote youth development.

Let’s look at a few policy highlights and how they might be relevant to your personal finances and planning.

New baby bonus of HK$20,000

As part of the effort to boost Hong Kong’s low birth rate, the government will start providing a HK$20,000 one-off cash bonus for each newborn baby in Hong Kong, if any one of the parents has been a Hong Kong permanent resident for at least three years.

Furthermore, the tax deduction ceiling for home loan interest or domestic rents will also be raised from HK$100,000 to HK$120,000 for taxpayers with their first born child up until the age of 18.

Authorities will also reserve 10 percent of subsidised flats for families with newborns. And families with newborn babies waiting for a public rental flat can also see their waiting time reduced by one year starting April next year.

The Hospital Authority will also be increasing the quota for in-vitro fertilisation (IVF) by more than 60%, from 1,100 treatment cycles per year to 1,800 treatment cycles per year.

Easing of property “spicy measures”

Several long-standing “spicy measures” previously designed to curb property speculation have also been relaxed in a bid to boost Hong Kong’s property market and alleviate financial burdens to Hong Kong residents.

The Buyer’s Stamp Duty and the New Residential Stamp Duty have both been reduced by half, from 15 percent to 7.5 percent.

The application period for the Special Stamp Duty (SSD) period was shortened from three to two years, meaning that if an owner got rid of their property after two years of acquiring it, they would not need to pay the 10 per cent SSD.

Meanwhile, incoming professionals will be offered a suspension of the stamp duty arrangement when acquiring a residential property. Income talents will only be required to pay the relevant stamp duty if subsequently they are unable to become a Hong Kong permanent resident.

Lowering of stock trading stamp duty

The rate of stamp duty for stock transactions was increased from 0.10% to 0.13% in August 2021, with an aim to increase government revenue in the short-to-medium term. 

As announced in the Policy Address and approved by the Legislative Council, the stamp duty rate will be restored back to 0.10% by 17 November 2023. The lowering of the stamp duty rate will lower investors’ transaction costs and also aims to enhance the competitiveness of Hong Kong’s stock market. 

Re-introducing Capital Investment Entrant Scheme

The Capital Investment Entrant Scheme (CIES) was an immigration scheme first introduced in 2003, but later suspended in 2015. The scheme enables eligible investors to migrate to Hong Kong through capital investment in the form of financial assets.

At the 2023 Policy Address, the Chief Executive has announced the re-introduction of the scheme. Eligible investors who make investments of HK$30 million or above in assets such as stocks, funds, and bonds can apply for entry into Hong Kong. 

Real estate investments will not be included as part of the scheme, with more details of the scheme to be announced by the end of the year.

Prepare for the future: managing finances through life stages and be mindful of investment costs

While the 2023 Policy Address provides some relief measures to new parents, it can be expensive to raise a child and maintain a household these days, especially in light of higher inflation and mortgage rates. Add up everything from diapers to music lessons, ballet classes, birthday parties and mortgage payments, it would be wise to plan ahead. 

As your financial adviser, Endowus is here to help - you can take reference to this guide from us on tips and strategies for financial planning for new parents.

Read more: Facing up to rising mortgage rates

Other key policies introduced in the 2023 Policy Address such as reducing property and stock trading stamp duties are all aimed at lowering the transaction cost for investors. 

Cost and return are two sides of the same coin. By paying high costs, you are giving up your future returns. Lowering the cost has an immediate substantial and direct boost to your returns. This cost compounds just as returns compound and results in a meaningful difference in returns over a long period of time. 

That is why Endowus is so focused on reducing the cost of investing for our clients at every layer, as much as possible. We were the first wealth platform in Asia to pioneer 100% Cashback on trailer commissions. As of August 2023, from a combination of 100% trailer commission rebates, savings from access to institutional share class and exclusive funds, Endowus has created more than US$40 million in savings for our clients.

Click here to get started on your investing journey with Endowus Hong Kong today. If still in doubt, feel free to schedule a free consultation with our SFC-licensed client advisors to start curating a personalised investment plan.

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Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this article are subject to market influences and contingent upon matters outside the control of Endowus and therefore may not be realised in the future. 

In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances.

This article has not been reviewed by the Securities and Futures Commission of Hong Kong.

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