(Bloomberg) -- Hong Kong’s retailers and financial firms may benefit from the city’s annual budget, which includes pandemic relief measures like consumption vouchers and more investment schemes to connect with the mainland. 

In a bid to cushion the economy amid the omicron outbreak, Financial Secretary Paul Chan said the government will hand out HK$10,000 ($1,280) in spending vouchers to eligible residents. Chan expected growth to slow to 2%-3.5% this year from 6.4% in 2021, following a raft of forecast downgrades by private forecasters including those at Goldman Sachs Group Inc. and Morgan Stanley.  

Read: Hong Kong to Spend $6 Billion to Fight Worsening Covid Outbreak

Hong Kong’s Hang Seng Index has climbed about 1% this year, after falling 14% in 2021 in one of the world’s worst performances among major benchmarks. The gauge has held up better than most of its regional peers in 2022 as cheap valuations attracted bargain hunters.  

Here’s a closer look at the stocks that may benefit and those that may lose from the budget. 

Winners

  • Retailers: Watch retailers like Sa Sa International Holdings, Chow Tai Fook Jewellery Group and Emperor Watch & Jewellery Ltd. as the consumption voucher is expected to benefit about 6.6 million people. A similar policy last year provided a fillip to consumption, though that was when the virus situation was much more stable.
  • Hong Kong’s stock exchange: The city is considering easing some listing requirements for large, advanced technology firms that are currently not eligible. The changes may allow the HKEX to see a stronger pipeline for initial public offerings.
  • Fund houses, brokerages: Hong Kong aims to launch the ETF connect program with China soon. Brokers like Bright Smart Securities and Haitong International Securities could benefit from commission fees. Regulators are also exploring ways for yuan-denominated stocks to be traded via the southbound Stock Connect, in which stamp duty on stock transfers paid by market makers may be waived.
  • Banks: The government is working with Chinese authorities to enhance measures for the Wealth Management Connect in the Greater Bay Area, including raising the investment quota. This will be a boon to banks that operate the scheme in the region, such as Hang Seng Bank Ltd. and Bank of China (Hong Kong) Ltd.
  • Real-estate developers, agents: First-time home buyers will be allowed to get mortgage insurance when purchasing estates valued up to HK$10 million with a 10% down payment, compared with the current HK$8 million cap. Developers may get a boost from more active transactions.

Losers 

  • Landlords: The government will introduce a progressive rating system for domestic properties, charging a higher tax rate for more expensive ones. The government also plans to prohibit landlords from terminating tenancies of specific sectors for rent payment failure. Overall, the budget’s impact on the property sector will be “relatively neutral” and “not reverse the downtrend in home prices”, wrote Citigroup Inc. analyst Ken Yeung.
  • Airlines: There was no mention of a timeline for re-opening international borders in the speech, which may add to the pains suffered by Hong Kong’s flagship carrier Cathay Pacific Airways Ltd.

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