• Tech companies and some real estate developers to benefit

• Government plans to cut 10,000 civil service jobs by 2028

Hong Kong’s technology enterprises are set to benefit from the city’s annual budget as the government plans to roll out investments in artificial intelligence research.

The city will allocate HK$1 billion ($129 million) to establish an AI research and development institute, Financial Secretary Paul Chan said in his budget speech on Wednesday. He also announced a reduction in stamp duty for some homes to boost the lackluster property market and plans to slash civil service jobs over the next few years.

Measures to develop the financial hub as an AI center may further boost Hong Kong-listed technology companies, that have helped drive a rally in the broader $5.8 trillion equity market. The Hang Seng Tech Index rebounded on Wednesday, rising as much as 5.3% after the budget announcement.

Here’s a closer look at the stakeholders that may benefit or lose out from the budget unveiled Wednesday:

Winners

• Technology companies: The government’s plan to develop AI as a core industry will give the sector a boost, while efforts by the city’s bourse to facilitate listing applications for technology and biotechnology companies would help them with fundraising.

• Real estate developers, homebuyers: Hong Kong will lower the stamp duty for residential units valued at HK$4 million or below in its latest attempt to boost property demand. That would impact 15% of property transactions and potentially benefit builders including Henderson Land Development Co. and Midland Holdings Ltd.

• The Jockey Club: The club, which runs horserace betting as the city’s only gambling operator, may benefit as the government explores the potential to regulate basketball betting activities.

• Tourism: A HK$1.2 billion allocation to boost tourism could provide a lift for leisure companies including Hong Kong’s Disney Land, which saw its profit rise to the highest in 20 years. Hotel and airline operators may also benefit.

Losers

• Civil servants: Chan said about 10,000 positions will be cut from the civil service by 2028 as the government looks to enhance efficiencies. Executive authorities and lawmakers will also take a pay freeze for the 2025/2026 term.

• Retailers: A lack of incentives for consumers may continue to weigh on spending, with the total value of retail sales plummeting for ten straight months through December. Retailers including China’s popular hot-pot chain Haidilao International Holding Ltd., China Resources Beer Holdings Co., and Chow Tai Fook Jewellery Group Ltd. may be affected.

• Foreign talent: The latest budget did not mention substantial measures to attract overseas talent, even as the city grapples with an ongoing brain drain.

• Vehicle owners: The government will look at increasing traffic violation fines as well as boosting road tunnel fees. It will also consider imposing a boundary facilities fee on private cars departing via land control points.