Hong Kong’s mini-budget “small and regressive”: Natixis
HONG KONG - A mini-budget announced by the Hong Kong Government, covering a third round of measures to support an economy battered by ongoing social unrest and the US/China, has been criticised by the banking and finance group Natixis as "small and regressive" given Hong Kong's "extremely difficult situation". The mini-budget covers measures worth just HK$2 billion.
"It is true that Government support is now seemingly more targetted on the sectors most impacted by social unrest, such as transport, retail and hospitality." Natixis says.
"Fuel subsidies and the expansion of rent cuts are the core of the package, together with measures on tourism to be announced soon.
"But the problem is that these measures support corporates rather than the low income population. This is once again a regressive package as income inequality remains a big problem for Hong Kong.
"We believe the measures are not strong enough to ease the cyclical pain (e.g. market sentiment and confidence) and tackle the structural problems (e.g. income inequality and health care).
"Fuel subsidies may not be relevant if there is no business. Rent cuts could be positive for corporates, but it is highly uncertain on whether the sweetener will be passed to employees.
"In the same vein, subsidies on airfares for domestic residents (a measure not yet officially confirmed) will only drive consumption away to other locations, while rebates on hotels for tourists may not be attractive if the light of the tunnel of social unrest remains distant."