AGP Executive Report

Tax Reform in Focus: Hong Kong has gazetted a bill to amend preferential tax regimes for funds, family-owned investment holding vehicles and carried interest, with the first LegCo reading set for June 24—key changes include how the minimum asset threshold is calculated for family offices and expanded qualifying investment scope. Digital Payments & Merchants: PayMe by HSBC and Payment Asia promoted AI-driven payment solutions aimed at reducing payment friction for Hong Kong merchants as cash use keeps falling. Construction Tech Push: The Construction Industry Council is staging its first Global AI and Smart Construction Conference and Exhibition at HK Science Park, pitching ready-to-deploy AI/robotics for safer, more efficient worksites. Cross-border Legal Talent: China’s draft amendment to the lawyers law would set a clearer legal basis for Hong Kong and Macao lawyers to practise in the Guangdong-Hong Kong-Macao Greater Bay Area, building on the existing pilot. Media Freedom Spotlight: Imprisoned Apple Daily founder Jimmy Lai received a DW Freedom of Speech Award in Bonn, with his daughter accepting on his behalf. Customs Crackdown: Hong Kong Customs reported multiple drug and smuggling actions, including a major ketamine seizure and duty-not-paid cigarette convictions. HIV Prevention Update: The Hong Kong Advisory Council on AIDS backed the Department of Health’s one-stop sexual health service and aligned local prevention work with UNAIDS’ 2026–2031 strategy. Market/Listing Watch: QMMM said Nasdaq has issued a delisting determination tied to delayed filings, and it plans to appeal.

Supply-Chain Politics: China opened the China International Supply Chain Expo in Beijing, pitching it as a resilience push amid resurging protectionism and geopolitical fragmentation. Markets Watch: Asian stocks wobbled after a Wall Street tech sell-off; Hong Kong’s Hang Seng slipped while South Korea’s Kospi fell sharply as chip names dragged sentiment. US-Iran Diplomacy: AP reports US Vice President JD Vance said talks with Iranian officials laid a “good foundation” for ending the war, while the Pentagon seeks about US$80bn from Congress for Iran operations. Hong Kong Finance & Policy: Hong Kong’s food sector faces pressure as Cantonese restaurants’ earnings reportedly fell hardest; lawmakers urged bolder promotion of local culinary culture. Local Governance & Services: The Hospital Authority Board meeting is open to the public on June 25, with updates on community care and cluster hospital services. Workplace Safety: The Labour Department issued a heat-stress warning, urging employers to prevent heat stroke during hot-weather work. Hong Kong Tech & Business: Hong Kong innovation chief Sun Dong highlighted Hong Kong-Australia I&T collaboration at an Australia-China summit. Legal & Institutions: Haldanes hired a family law partner from Ip & Heathfield, adding experience in custody, child abduction and cross-border divorce jurisdiction.

Macau Health & Safety: WHO and Macau’s Health Bureau co-hosted a seminar on TCM clinical safety, spotlighting acupuncture and moxibustion for smoking cessation, aiming to strengthen practitioner capability and reduce side effects. Cross-border Travel: China’s Dragon Boat Festival holiday saw cross-border trips rise 12.9%, with foreign visitor entries up 23.3% and Hong Kong/Macao/Taiwan residents’ trips jumping 18.4%. Public Accountability in Hong Kong: A judge-led committee investigating the Wang Fuk Court fire ruled out converting into a statutory commission, citing witness cooperation limits and the risk of complicating criminal proceedings. AI & IP Pressure: A Getty–OpenAI display deal highlights the missing question on whether licensed images can be used to train future models. Local Crime & Enforcement: Hong Kong Customs reported major drug seizures at airport control points, including ketamine and cocaine cases, with arrests. Finance Infrastructure: HKEX and HKMA tested digital payments for after-hours derivatives margin payments, pushing Hong Kong’s market plumbing forward. Regional Security: Japan arrested an alleged mastermind tied to a $15B crypto scam linked to the Prince Group, with alleged links spanning Hong Kong.

Cross-border Travel Outlook: Thailand says Middle East turmoil is hurting long-haul demand, but intra-Asia travel is rebounding as Chinese arrivals rise. Green Mobility & Expo Push: Geely Farizon debuted methanol-electric and pure-electric commercial vehicles at the Hong Kong International Automotive and Supply Chain Expo, including a Hong Kong-tailored double-decker and a methanol bus cleared for operation. Emergency Response Cooperation: The Government Flying Service held an International Symposium on Emergency Response and Aeromedical Services, signing MOUs to deepen cross-regional training and resource sharing. Capital Markets Tech: HKEX and HKMA launched a pilot using e-HKD for after-hours derivatives margin payments, aiming to improve risk management outside banking hours. After-Hours Trading Infrastructure: HKEX also moves toward digital payments in the AHT session, inviting clearing participants into optional real-value trial transactions. Competitiveness Boost: Hong Kong climbed to No.2 in the IMD World Competitiveness Ranking, citing government and business efficiency gains. Public Safety Probe: A Tai Po fire investigation committee will not be upgraded to a statutory commission of inquiry, with hearings continuing under a nine-month completion request. Air Cargo Expansion: Cathay Cargo plans to add an Air Hong Kong A330 freighter to expand regional capacity. AI Policy & Markets: China rolled out measures to accelerate AI adoption in consumer markets, lifting AI-related stocks including in Hong Kong. Wealth & Finance Narrative: Financial Secretary Paul Chan reiterated Hong Kong’s role as a bridge for mainland hard-tech firms’ overseas expansion and global capital access.

Mainland Tech Go-Global: Financial Secretary Paul Chan says Hong Kong is becoming a “strategic global foothold” for mainland hard-tech firms, citing the city’s common-law system, free capital flow, and investor network as a bridge to overseas markets. Customs Crackdown: Hong Kong Customs seized about $30,000 of suspected counterfeit jewellery at a Hong Kong exhibition and arrested four; separately, it seized 29kg ketamine and 2.85kg cocaine at the airport, arresting three in passenger drug cases. Public Safety & Health: The Home Affairs Department opened 19 temporary heat shelters during very hot weather, while US health officials warned a measles-infected traveller passed through LAX amid World Cup crowds. AI + Energy Pressure: A commentary argues Hong Kong’s AI push risks stalling without energy planning, warning of long-running power deficits and the need to link compute ambitions to supply resilience. Regional Security: China says it will conduct routine maritime surveys east of Taiwan to diversify claims, including around the Pratas Islands.

Hong Kong as “strategic adaptation ground”: Financial Secretary Paul Chan says mainland tech giants are using the city to build brands, governance and global sales networks, not just raise funds, positioning Hong Kong as a bridge for international capital and talent. Northern Metropolis rural planning: A pilot scheme will let residents in Ho Sheung Heung and Yin Kong convert whole houses into restaurants, guest houses or shops without prior applications, with possible expansion if it works. Election transparency concern: Hong Kong election authorities have stopped compiling voter turnout data by age and sex, drawing criticism that it weakens transparency and limits candidates’ ability to understand voter demographics. Finance push for yuan reach: Hong Kong and Shanghai move to deepen yuan internationalisation, with Hong Kong set to start trading five-year Chinese treasury bond futures on Aug 3. Labour heat safety: The Labour Department issued heat-stress warnings urging employers to assess risks and implement measures to prevent heat stroke. Life sciences go-global: InvestHK will lead a delegation to BIO International Convention 2026 in San Diego to pitch Hong Kong as a launchpad for biotech and health tech. Youth facilities: Two new youth spaces under the Home and Youth Affairs Bureau open to expand young people’s networks and opportunities. Cultural diplomacy: Alice Mak attended the Public Fuxi Commemoration Ceremony in Gansu, highlighting Hong Kong’s cultural exchange role.

Data & Tech: China’s first wind-powered underwater data centre off Shanghai is touted as a greener, lower-water-demand model for AI infrastructure, while Hong Kong’s own push for AI-ready capacity continues via Equinix’s new HK6 and other Greater Bay Area links. Local Governance & Public Safety: Police are investigating a fatal Sau Mau Ping motorcycle crash after a 25-year-old man hit a bus at a stop; Customs also reported major airport drug busts, including ketamine and cannabis seizures. Economic Policy: Hong Kong is moving toward a first Five-Year Plan consultation and related policy groundwork, alongside preparations for new financial products and market plumbing. Culture & Community: Dragon Boat Festival events drew crowds across Hong Kong, and the city ran ICH Month programming like the “ICH Cuisine” carnival. International Relations: A Philippines envoy in Beijing urged the Filipino community to support a “new equilibrium” in ties with China despite sea disputes. Business Moves: Starbucks cut corporate jobs in London and Hong Kong as it leans more on licensees for store control.

Cross-border Innovation Push: Hong Kong’s Development Bureau says pilot measures this year will ease cross-border flows of data, materials and capital for the Northern Metropolis, with possible expansion beyond the Hong Kong Park under the Hetao Shenzhen-Hong Kong Science and Technology Innovation Co-operation Zone. PLA Anniversary Open Day: Thousands toured the PLA Hong Kong Garrison’s Ngong Shuen Chau Barracks as it opened to the public for the 29th anniversary of the city’s return to Chinese rule. Passport Probe Pressure: A report says Nepal’s PMO advisers pressed the anti-graft body to speed up a passport procurement investigation and push for arrests, raising questions about executive overreach. e-HKD for Derivatives Margins: Hong Kong’s e-HKD pilot is being used to test after-hours derivatives margin payments, part of broader market infrastructure upgrades. Labour Safety in Heat: The Labour Department issued a Heat Stress at Work Warning, urging employers to assess risks and add controls like shade, ventilation and rest breaks. AI Data Centre Deal Watch: Abu Dhabi-backed MGX is reportedly weighing a multibillion-dollar buyout of Singapore data-centre operator DayOne, potentially reshaping AI infrastructure competition. Tourism & Culture Tie-in: Shangri-La’s Kuok Hui Kwong urged Hong Kong to better leverage traditional festivals for international cultural tourism, while Swire Coca-Cola HK backs the Sun Life Hong Kong International Dragon Boat Races with a major harbour photo installation. EU Sanctions Update: The EU adopted a “mini” sanctions package targeting Russia-linked entities, including designations tied to the shadow fleet and military-industrial complex. Health Policy: Hong Kong’s poverty strategy is shifting from income-line targeting to service-based support for specific groups, with officials citing KPI improvements.

Hong Kong Tech & Finance: Equinix opened its first phase of an AI-ready HK6 data centre in Hong Kong with a direct, low-latency private link to the Hong Kong–Shenzhen Innovation and Technology Park, pitching the Greater Bay Area as the next R&D magnet. Capital Markets: HKEX and HKMA tested e-HKD for after-hours derivatives margin payments, while Hong Kong is also moving toward new RMB treasury bond futures and broader RMB product development. Public Policy & Planning: Hong Kong’s education authorities are likely to miss the timeline for unveiling a university town concept plan in the Northern Metropolis, as it must align with the city’s first five-year plan due in the third quarter. Governance & Oversight: Reuters’ report says Hong Kong media face intimidation, financial pressure, political pressure and tax audits—raising the stakes for newsroom independence. Law & Order: Hong Kong Customs seized about 42kg of ketamine at the airport and arrested two men, with cases set for court. Regional Context: Markets steadied as Strait of Hormuz traffic picked up after an Israel–Hezbollah ceasefire, though talks on US-Iran issues remain fragile.

Hong Kong Competitiveness Boost: HKSAR jumped to No.2 globally in the IMD World Competitiveness Yearbook 2026, topping “Tax Policy” and ranking highly across finance, trade, and education—an official “value hub” pitch as the city rolls out its first five-year plan. Poverty Policy Debate: Labour and Welfare Secretary Chris Sun defended dropping the poverty line as an aid trigger, calling it a limited income-only metric, and said the government will widen focus to carers via a new targeted poverty alleviation commission. National Security Fallout in the UK: Two men tied to Hong Kong and China—one a former UK Border Force officer—were jailed for spying on pro-democracy dissidents in Britain, with sentences of eight and 10 years. AI-Ready Infrastructure: Equinix opened its sixth HK data centre (HK6), built for AI workloads and direct connectivity to the Hong Kong-Shenzhen I&T Park. Finance Market Tools: Hong Kong will launch offshore China sovereign bond futures on Aug. 3, aiming to give global investors a hedge for mainland yuan debt. Court Ruling: A Hong Kong court dismissed a HK$12m claim by actress Cecilia Cheung’s former agent, finding no signed agency contract and no proven advance payment.

National Security & Courts: A UK court jailed a former Border Force officer (Peter Wai) and a retired Hong Kong police officer (Bill Yuen) for spying on Hong Kong pro-democracy dissidents in Britain for China, with Wai getting 10 years and Yuen eight, after prosecutors said Wai used Home Office systems for surveillance and Yuen ran “shadow policing” from the Hong Kong Economic and Trade Office in London. Finance & AI Governance: JPMorgan Chase reportedly blocked Hong Kong staff from using Anthropic’s Claude, joining similar moves by other banks as licensing and national-security concerns shape how frontier AI is deployed in the city. Local Economy & Planning: Hong Kong climbed to No.2 in the IMD World Competitiveness Yearbook 2026, topping “tax policy” and ranking highly on finance and trade, while officials pointed to the first five-year plan as a new push for investor confidence. Public Services & Weather: Hong Kong issued/kept Black Rainstorm Warning guidance, urging employers to set contingency work arrangements and keep indoor work running unless conditions become unsafe. Tech & Markets: Payful (with a Hong Kong unit) launched a cloud-based Visa charge-card programme via BPC SmartVista, aiming for faster virtual card issuance for corporate and merchant clients. Business & Industry: Hong Kong’s auto show saw Chinese EV brands push into right-hand-drive markets, though attendance was muted due to heavy rain.

Public Housing & Community Rules: The Housing Department says Kai Yan Court owners must amend the deed of mutual covenant to let a cafe become dog-friendly, even after it won a ballot—highlighting how estate land-use terms can override licensing. Housing Authority Policy: The Housing Authority approved a higher 2026-27 public rental housing allocation, with PRH estimates rising to about 34,500 flats, and also backed new subsidised sale flat letting/resale schemes to help elderly owners and White Form tenants. AI in Insurance: The Insurance Authority added three insurers as core participants in its AI cohort programme, bringing core participants to 10 since Aug 2025, as it pushes Centres of Excellence and AI use cases tied to customer outcomes. Competitiveness Watch: Hong Kong climbed to No. 2 in the IMD global competitiveness ranking, its best showing in seven years, driven by government efficiency, infrastructure, economic performance and business efficiency. Finance & Markets: CSOP launched Hong Kong’s first ETF tracking the Kospi 200, while BNP Paribas and JPMorgan reportedly restricted access to Anthropic’s Claude for Hong Kong staff amid US export-control and data-security concerns. Trade & Investment: The Philippines said it is renegotiating tax treaties with Hong Kong and Singapore and pursuing new DTAs to reduce double-tax friction for investors. Law & Order: Hong Kong Police carried out raids tied to an illegal betting syndicate ahead of the World Cup, warning the public against placing wagers with illegal bookmakers. Regional Development: Xinjiang’s China-Eurasia Expo will run June 25-29 in Urumqi with Hong Kong and Macao investment promotion pavilions, and the region is also offering subsidies to boost inbound tourism.

Mainland-HK Policy: China’s top Hong Kong-and-Macao official Xia Baolong wrapped up a two-day inspection visit, meeting Chief Executive John Lee and touring Huanggang Port and Kwai Chung Container Terminal 8 as he focused on port development and shipping under the 15th Five-Year Plan. Finance & Markets: HKMA announced bond tenders—HK$1.25b 10-year and HK$1.75b 5-year—both for June 24, while Paul Chan pushed Hong Kong–Shanghai financial synergy at the Lujiazui Forum. Digital Finance: A PBOC research bureau official said regulators should closely track stablecoins’ impact on cross-border payments as China expands the digital yuan cross-border platform (CBETS) with 26 institutions signing up. Trade & Tax: The Philippines is in talks with Singapore and Hong Kong to update double taxation agreements to attract more foreign direct investment and create jobs. Public Safety: Security minister Chris Tang Ping-keung said Hong Kong will tighten laws after child sexual abuse cases rose 20% in 2025, with police figures submitted to legislators. Customs Enforcement: Hong Kong Customs seized about 8kg of cannabis at the airport and arrested a Filipino passenger, as well as other drug and counterfeit-goods actions ahead of major events.

Court Ruling: Hong Kong’s top court has rejected a challenge to the law banning calls for election boycotts, saying the restriction is needed to protect “patriots-only” governance and keep election participation and confidence intact. Public Health & Transport: The government will require mandatory health checks for commercial drivers aged 65+ by mid-next year, lowering the threshold from 70 and shortening licence validity to one year with annual assessments. Economic Planning: HKSAR has launched a two-month public consultation on its first Five-Year Plan (2026-2030), covering Northern Metropolis development, innovation and industry, and livelihood areas like healthcare, education, housing and elderly care. Finance & Markets: Beijing signals support for Hong Kong to trade yuan-denominated treasury bond futures soon, aiming to deepen the offshore yuan market. Green Shipping: The Marine Department rolls out new incentives for green maritime fuels, including port dues concessions and registration incentives for eligible vessels. Tech & IPO Watch: Xiaohongshu is reportedly preparing a Hong Kong IPO targeting a valuation above $70 billion, with Goldman Sachs and CICC named as advisers. Customs Enforcement: Customs seized about $150,000 worth of suspected anti-obesity injection vials and arrested a 31-year-old consignee after a controlled delivery.

Northern Metropolis & 15th Five-Year Alignment: China’s top Hong Kong-and-Macao affairs official Xia Baolong visited multiple sites, including Hung Shui Kiu and the Northern Metropolis University Town, to review progress and planning tied to the national 15th Five-Year Strategy. Anti-corruption Focus: ICAC said building renovation corruption complaints rose to more than 1.5 times year-on-year in early 2026 after the Wang Fuk Court fire, and it has boosted investigators to 100. Court Watch: Hong Kong’s High Court dismissed a HK$12m claim by actress Cecilia Cheung’s former agent, finding no signed agency contract and no proven advance payment. Trade & Governance: HKTDC marked its 60th anniversary with calls for Hong Kong to stay outward-looking and protect free-port freedoms, while the Secretary for Justice highlighted data privacy and proper AI use at a privacy summit. Finance & Markets: Evergrande liquidators asked a court to void an SFC-linked PwC HK shareholder compensation deal, arguing the regulator lacked authority and that shareholders would likely get nothing. Macao Culture: Macau plans to upgrade the Dom Pedro V Theatre into an immersive stage venue at a UNESCO heritage site, linking culture, education and Greater Bay Area talent.

Northern Metropolis & Housing Delivery: Beijing’s Xia Baolong begins a Hong Kong visit inspecting housing and Northern Metropolis projects, including a modular public housing site in Yuen Long aimed at families waiting for rental flats. Economic Planning Consultation: The HKSAR government launches public consultation on its first five-year economic and social development plan (2026-2030), covering growth, infrastructure, green transformation, and key livelihood areas. Labour Policy Tightening: From 16 June 2026, the Enhanced Supplementary Labour Scheme adds a tiered vetting mechanism; food and beverage services face a stricter 3:1 manning ratio with longer local recruitment and job-fair attendance requirements. Legal/Professional Services: The Department of Justice backs seven mediation regulatory recommendations to strengthen Hong Kong’s “capital of mediation” status. AI & Privacy Governance: Secretary for Justice Paul Lam addresses the PCPD’s 30th anniversary privacy summit, as Hong Kong pushes responsible AI use. Infrastructure Contract: AtkinsRéalis and AECOM win a design-and-construction contract for the Northern Metropolis Highway (San Tin Section), a key east-west corridor. Customs Enforcement: Hong Kong Customs seizes 120kg of suspected smuggled silver worth about $2.2m at the airport. Energy/EV Push: GAC Energy and Shell Hong Kong sign a strategic partnership to expand EV charging and energy services, aligning with the city’s electrification targets. Civil Service Pay: The government announces a 2% across-the-board civil service pay increase for 2026-27 with retrospective effect from 1 April 2026.