What’s new: Hong Kong relaunched an investment-for-residency program suspended in 2015 to lure global talent and new capital into the city.
The program, unveiled Wednesday as part of the government’s budget, will allow applicants who invest a certain amount in the local asset market — excluding property — to reside and pursue development in Hong Kong, Financial Secretary Paul Chan Mo-po said in his budget speech.
Details of the program have not been announced, such as the investment threshold, asset range, whether applicants need to live in Hong Kong seven years to obtain permanent-resident status, and whether Chinese mainland residents can participate.
The investment immigration program will help to inject long-term funds into the Hong Kong stock market, Zhongtai International analyst Yan Zhaojun said. Due to the program’s restrictions, the risk-taking of these funds is generally low, and most are expected to invest in stocks with high dividends and low valuations such as telecommunications, banking and energy stocks, Yan said.
The background: Hong Kong initiated a similar investment-for-residency program in 2003. Applicants who invested at least HK$10 million ($1.28 million) could win residency in Hong Kong, including through buying property.
Then-Chief Executive Leung Chun-ying suspended the program in 2015 because it deviated from its policy goal. By the end of 2014, Hong Kong had approved more than 25,000 applications, bringing in investment of about HK$216 billion. But inflows into the property market pushed up housing prices and affected the livelihoods of local residents.
Since 2020, tens of thousands of people have left Hong Kong as pandemic curbs restricted activity. Among those who departed were the bankers, lawyers and other professionals who traditionally helped make the city a freewheeling financial center. The outflow strained an already aging Hong Kong population and pushed up prices in the city’s main rival, Singapore.
From the end of 2019 through 2022, the city’s population fell by about 187,300, or 2.5%, to 7.33 million. For 2022, the decline was 68,300.
There is urgency to burnishing Hong Kong’s allure. The economy has shrunk three of the past four years. Home prices plunged about 15% in 2022 in the biggest drop since the global financial crisis, according to a Centaline index. Businesses are struggling to find workers to meet increased demand as visitors start to return.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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