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© Bloomberg. Residential buildings under construction at the Wetland Seasons Park project, developed by Sun Hung Kai Properties Ltd., in the Tin Shui Wai area of Hong Kong, China, on Sunday, Jan. 31, 2021. In an Asian financial hub that already faces high flood risks, no area is more exposed than the northwest edge of the New Territories that juts into the Pearl River Delta toward Macau. In just a few decades, residents in the fledgling district could face life-disrupting flooding caused by storm surges that are set to become more frequent. Photographer: Billy H.C. Kwok/Bloomberg

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(Bloomberg) — Hong Kong’s decision to raise the stamp duty on stock trading won’t harm the competitiveness of the financial hub, the city’s finance chief said.

“We will continue to monitor market developments and keep an open mind, but on the other hand according to the information available to us up till now, we don’t think this modest increase in stamp duty has in anyway harmed our competitiveness,” Financial Secretary Paul Chan said in an interview with Bloomberg Television on Tuesday. The city isn’t currently planning any more increases, he said.

The city shook markets last week by raising the stamp duty on stock trading by 30% to 0.13% as part of an effort to boost spending and relieve economic distress amid a record budget deficit and the highest unemployment in 16 years. Shares sold off broadly on Wednesday as the budget was announced, sending the stock of the city’s bourse plunging almost 9%.

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The financial hub’s economy has struggled under political and social unrest in 2019 and last year’s coronavirus outbreak, with tourism and consumption evaporating and unemployment surging. After a record 6.1% contraction last year, the economy will grow in a range of 3.5% to 5.5% in 2021, the city estimates.

Unveiled on Feb. 24, the budget outlined HK$120 billion ($15.5 billion) of fiscal support to spur consumption and ease joblessness. Key measures include a HK$5,000 consumption voucher for residents and new arrivals, as well as loans to the unemployed.

©2021 Bloomberg L.P.

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