Recently, Fitch responded to the Hong Kong new budget by stating that the Hong Kong government's announcement of a comprehensive withdrawal of harsh measures and reintroduction of overseas demand may support the firm's non-consensus view that the market is overly bearish on Hong Kong property prices. Welfare reductions are well-received by the public, and the marginal increase in salary tax is unlikely to have a substantial impact on the economy. Fitch believes that Hong Kong property prices may experience a mid-single-digit adjustment in the first half of 2024, followed by a moderate recovery in the second half. Fitch believes that the relaxation of real estate measures came earlier than expected. This move will open up the Hong Kong residential market to a wider range of potential buyers beyond just local owner-occupiers. Due to strong end-user demand, Fitch believes that the market's unanimous view on Hong Kong property prices (declining by another 10-15% this year) is overly pessimistic. Policy relaxation could help achieve Fitch's non-consensus view. Among developers, Fitch remains positive on Henderson Land Development (00012), as its diversified product portfolio can capture opportunities in shifting demand patterns. It also sees good prospects for Sino Land (00083), as its net cash can expand during a market downturn, accompanied by a 7% dividend yield. In terms of fiscal balance, due to weak land sales and stamp duty revenue, the Hong Kong government has revised downwards its revenue forecast for the 2023/24 fiscal year, expecting a deficit of HK$102 billion, further reducing fiscal reserves to HK$733 billion. With the support of a recovery in the property/capital markets, it is expected that the budget deficit for the 2024/25 fiscal year will decrease to HK$48 billion. The government expects its operational/non-operational accounts to return to a surplus only in the 2026/2028 financial years. To diversify revenue streams, the Hong Kong government will introduce a new standard tax rate of 16% on income exceeding HK$5 million, affecting an estimated 12,000 taxpayers, while most taxpayers subject to progressive salary tax will not be affected. The government will introduce a progressive property tax rate, levy a 3% hotel accommodation tax, and increase tobacco tax. The government's goal is to issue HK$95 billion to HK$135 billion in bonds annually over the next 5 years to meet the capital needs of the Northern Metropolis/infrastructure projects.