Hong Kong's revised budget surplus surprises at HK$63.8bn

Thanks partly to higher stamp duty revenue.

In FY2014-15, the revised Budget Surplus came in at HK$63.8bn, much higher than the original estimate of HK$8.9bn.

According to a research note from Barclays, higher stamp duty revenue (HK$29.7bn) and higher profit tax revenue (HK$18.5bn) were two contributing factors.

While land sale revenue also exceeded expectations, the HK$73.2bn land revenue was only HK$3.2bn above original estimates.

Meanwhile, for FY2015-16, the government expects total government expenditure to rise by 11% to HK$440.8bn and total government revenue to reach HK$477.6bn, resulting in a fiscal surplus of HK$36.8bn.

Here's more from Barclays:

Economic growth and inflation forecasts – In 2014, Hong Kong’s GDP growth was 2.3%, below the past decade’s 3.9% average. 2014 underlying CPI came in at 3.5%. For 2015, the Financial Secretary expects GDP to grow between 1-3% with underlying inflation of 3.0%. For the medium term, the Government forecasts 2016-2019 average GDP growth of 3.5% and underlying inflation of 3.5%.

Land supply in 2015-16, broadly unchanged: For 2015-16, the Government expects to sell 29 residential sites capable of producing 16,000 units (Vs. 20 sites and 6,300 units in 2014-15).

Together with other sources of land supply (i.e. MTR, Urban Renewal Authority, etc), total residential land supply is expected to reach 19,000 units (versus 20,000 units in 2014-15).

On the commercial side, the Government will release four commercial and one hotel site, providing 180,000sqm and 500 rooms (Vs. 180,000sqm and 1,100 rooms in 2014-15).

As for land sale revenue, the forecast for 2015-16 was kept unchanged at HK$70bn. Although this is down 4.4% from the revised estimate of HK$73.2bn for 2014-15, it is unchanged from the original budget amount for 2014-15.