Weekly Buzz: 2026/27 Budget: Tax Relief, AI Bets, and Your Next Move

Financial Secretary Paul Chan unveiled the 2026/27 Budget this week, striking a balance between fiscal prudence and social support. With a heavy focus on tax relief, grassroots aid, and a bold "AI+" roadmap, the government aims to stabilise the economy while accelerating Hong Kong's digital transformation. Here are four key takeaways for your wallet and career:

A double dose of relief: Tax and rates concessions

To ease the sting of inflation and high interest rates, the government is waiving 100% of salaries and personal income tax for 2025/26 (capped at $3,000). This, paired with a 10% hike in basic and single parent allowances to $145,000, will benefit roughly 2.12 million taxpayers.

On the property front, rates for the first two quarters of 2026/27 will be waived (capped at $1,000 for residential and $500 for non-residential). Together, these measures are expected to inject $8 billion in purchasing power back into the local economy.

Grassroots support: The "Double Payment" 

Social safety nets remain a priority. Recipients of CSSA, Old Age Allowance (Fruit Money), and Disability Allowance will receive an extra month of standard payments, benefiting 1.7 million people.

Similar top-ups apply to the Working Family Allowance. As lower-income households feel the brunt of fluctuating food and energy prices, these one-off payments  will go a long way for households feeling the brunt of this economic transition.

Silver economy and family first

Addressing an ageing population, Elderly Health Care Vouchers are set to increase to $2,500, with the network expanding to over 15 designated medical sites in the GBA. This "portable healthcare" strategy aims to divert 5% of non-emergency visits away from local public hospitals.

To boost birth rates, the $20,000 newborn baby bonus continues, supported by a $1 billion injection into childcare services to add 1,000 subsidised places. So far, the bonus has already lightened the load for about 30,000 families.

All-In on "AI+": The skills revolution 

Hong Kong has set its sights on building a comprehensive AI ecosystem. A new "AI+ and Industries Development Strategy Committee" will lead the charge, supported by the AI Research Institute and the Sandy Ridge Data Park.

To future-proof the workforce, $50 million will fund AI learning across universities and tech firms, while the Employees Retraining Board will be upgraded into the "Skills Upgrading Academy." Additionally, $100 million is earmarked to digitise government services and train civil servants, proving that the AI leap isn't just for techies, it’s for everyone.

What’s the takeaway for investors?

The $3,000 tax break and increased allowances mean a little extra cash in your pocket. But in a high-inflation world, letting that "found" money sit in a low-yield savings account can be a missed opportunity.

As the government bets big on "Digital + Intelligence" to drive the next phase of growth, your investment strategy should be just as forward-thinking. Instead of letting inflation erode your cash, consider putting it to work in a globally diversified portfolio. In the era of AI and digital shifts, you can keep your wealth growing alongside the technology of tomorrow.

(Looking to build a globally diversified, multi-asset portfolio? Explore our General Investing portfolios here.)

Investor’s Corner: The narrative says panic, the fundamentals say otherwise

A viral thinkpiece by Citrini Research rattled markets this week. It paints a 2028 scenario where AI rapidly displaces high-income workers, triggering widespread unemployment and a broader economic downturn. US software stocks bore the brunt of the reaction, and the S&P 500 slipped around 1% on Monday.

To add some perspective, that scenario rests on a narrow set of forward-looking assumptions: rapid acceleration in job displacement over the next two years, limited policy response from governments, and a scenario where productivity surges while overall economic demand simultaneously collapses. 

When worry is already in the air, narratives like these can amplify market volatility. But the scenario described remains hypothetical, as AI’s eventual economic impact will depend on a wide range of factors that are still evolving – including adoption speed, corporate behavior, and policy responses. 

That means short-term market reactions may reflect shifting expectations rather than changes in underlying fundamentals. Over time, however, market performance tends to be driven by fundamentals like profits and growth, as stock prices ultimately reflect how companies perform.

AI is transformative, but disruption and opportunity tend to come hand in hand. Goldman Sachs estimates that AI could lift US productivity growth by around 1.5 percentage points annually over the next decade. For long-term investors, staying diversified and focused on the fundamentals remains essential to capturing opportunity beyond the narratives.

(For more on our views on AI in the year ahead, read our 2026 Macro Outlook.)