(Bloomberg) -- Hong Kong’s property developers, brokerages and retailers are poised to benefit from the chief executive’s policy address as the government relaxes mortgage rules and expands a plan to attract wealthy immigrants.
The Hong Kong Monetary Authority will set the loan-to-value ratio for all residential properties at 70%, Chief Executive John Lee said in a speech on Wednesday. The city will also allow the inclusion of home purchases at a minimum price of HK$50 million ($6.4 million) as part of required investment for migrants.
He announced plans to encourage large-scale mainland firms to list in Hong Kong, boost tourism, attract talent and build an international gold trading market to strengthen the city’s status as a finance center. Hong Kong will also bolster offshore yuan liquidity and make good use of the currency swap agreement with China, he added. The city will also reduce levies for some liquor to 10% from 100%.
The city’s equity benchmark Hang Seng Index gained as much as 1.1% before reversing course. Property stocks were among the biggest gainers, helping a sub-gauge of builder shares rise as much as 3.9%. Tourism and consumer related stocks remained muted.
Read: Hong Kong to Relax Housing Rules, Cut Liquor Tax in Growth Push
Here’s a closer look at the stakeholders that may benefit and those that may lose out from the plans unveiled on Wednesday:
Winners
- Hong Kong homebuyers: City residents will benefit as authorities adjust the maximum loan to value ratio for residential properties to 70% from 60%, while the maximum debt servicing ratio to 50%
- Luxury property developers: The expansion of a migration plan to include some property purchases as part of required investments may boost luxury home sales in the city, with projects such as Sun Hung Kai Properties Ltd.’s Victoria Harbour in North Point, Sino Land Co.’s St. George’s Mansions in Ho Man Tin, CK Asset Holdings Ltd.’s 21 Borrett Road in Mid-Levels and Kerry Properties Ltd.’s Mont Verra atop Beacon Hill among potential beneficiaries.
- Restaurants and bars: They are direct beneficiaries of lower taxes on liquors. Hong Kong will reduce the duty rate for liquor with an import price of over HK$200 to 10% from 100%.
- Exchanges and banking sector: The city’s plans to further enhance its securities market, including encouraging more initial public offerings from the mainland and lower transaction costs, will likely benefit shares of Hong Kong Exchanges & Clearing Ltd., banks and brokerages.
- Airlines: Cathay Pacific Airways Ltd.’s China business may get a boost from Hong Kong’s efforts to boost tourism, shopping and sports as well as the city’s push for greater integration with the mainland.
Losers
- Mid- to low-end grocers: They will continue to lose out to their mainland counterparts as greater integration with the Greater Bay Area may prompt more residents from Hong Kong to travel to China for daily necessities and services.
- Commercial real estate landlords: The lack of measures to tackle the slump in commercial property may continue to put pressure on the sector. Office vacancy rates were at a record high in the second quarter.
- Luxury retailers: Companies such as Chow Tai Fook Jewellery Group and Prada Spa may continue to languish as the extension of multiple-entry visas to China raises the concern of residents spending in the mainland instead of in Hong Kong.
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