Hong Kong Surprises with Budget Surplus Driven by IPO Boom
HONG KONG – Hong Kong has defied expectations, posting a modest budget surplus of HK$2.9 billion (approximately $372 million USD) for the 2025-26 financial year, a significant turnaround from a previously projected deficit of HK$67 billion. The unexpected positive result, announced Wednesday by Financial Secretary Paul Chan Mo-po, is largely attributed to a surge in initial public offerings (IPOs) and robust stock market activity.
The city’s financial market has been particularly strong, raising HK$150 billion ($19.3 billion USD) through IPOs, solidifying Hong Kong’s position as a global leader in capital raising. This influx of activity directly boosted government revenue through stamp duties on stock transactions, increasing by tens of billions, according to Billy Mak Sui-choi, an associate professor at Baptist University.
“The main reason is that in the past year… Hong Kong stock turnover was much larger, so government stamp duty [revenue] increased by a lot,” Mak explained.
Economists are cautiously optimistic about the outlook for the 2026-27 financial year, citing a stabilizing property market and strategic transfers within government funds as contributing factors. Lee Shu-kam, head of Hong Kong Shue Yan University’s economics and finance department, believes a positive cycle is developing.
“A compounding effect from new companies coming to Hong Kong, a booming stock market and a recovering property sector would mutually reinforce one another to sustain higher tax revenues,” Lee said.
The strong IPO market signals Hong Kong’s continued appeal as a destination for overseas investment, a key focus of the government’s economic strategy. Chan highlighted the progress made in attracting foreign capital, noting the stock exchange’s leading position in IPOs during the first half of the year. Hong Kong’s bank deposits, totaling HK$19 trillion, further underscore its status as a safe haven for investors.