Hong Kong budget: city to pump HK$22 billion into private equity fund, as finance chief predicts economy will slow over next four years

Hong Kong is to pump HK$22 billion into a new private equity fund geared towards the city’s future in anticipation the economy will slow in the next four years, the first time it has taken such a step.

The cash will be put into the Hong Kong Growth Portfolio, and will see fund managers invest in companies, projects and funds with a Hong Kong nexus. It is similar in nature to Temasek, Singapore’s sovereign fund.

In his budget speech on Wednesday, Financial Secretary Paul Chan Mo-po forecast gross domestic product growth would average at 2.8 per cent annually from 2021/22 to 2024/25 on the backdrop of external economic uncertainties. That is below the average annual rise of 2.9 per cent over the past decade.

He expected the GDP would range from 0.5 per cent growth to 1.5 per cent decline this year on the back of the coronavirus epidemic, the US-China trade war, and the legacy of the anti-government protests. Last year’s GDP contracted 1.2 per cent.

Chan doubled the package of sweeteners – mostly non-recurring – to HK$120 billion from last year, which a government source said would generate 3 per cent growth in GDP and help cushion the economic downturn.