Here are reasons to believe HK FY13 budget is expansionary

Looming fiscal stimulus awaits 2013.

Here's from Nomura:

We expect an expansionary FY13 budget given weak external demand. 

Activity: Retail sales growth volume increased by 8.5% y-o-y in September from 3.2% in August while the PMI rose to 50.5 from 49.6. We expect private consumption to remain robust, supported by a tight labour market, positive wealth effects from buoyant property prices and increasing visitor numbers. Further, domestic fixed asset investment should remain strong supported by infrastructure works.

We expect fiscal stimulus and a moderate improvement in external demand to lift real GDP growth from 1.2% in 2012 to 2.5% in 2013. A modest recovery
in the global economy should boost GDP growth further to 3.5% in 2014.

Inflation: CPI inflation ticked up to 3.8% y-o-y in September from 3.7% in October on food prices. Inflation should rise through 2013, driven by higher food, fuel and rent prices, only partly offset by inflation-mitigating fiscal measures such as a temporary waiver of public housing rent and electricity subsidies. We expect CPI inflation to rise from 4.0% in 2012 to 4.3% in 2013. 

Policy: Hong Kong's fiscal policy is expansionary as the budget for FY12 (year starting April) includes not only inflation-mitigating measures but also an income tax reduction for individuals of up to HKD12,000 per person and a 14.8% increase in capital expenditure. This should continue to help stabilise inflation and support the job market. We expect the FY13 budget to also be expansionary given that external demand remains weak. We would also expect the government to continue implementing more macro-prudential property tightening measures, such as hikes in stamp duty if house prices continue to rise, although so far these piecemeal measures have had limited success in cooling the property market. Because of the USD/HKD peg, Hong Kong is importing the super loose monetary policy of the US, and it remains unclear whether tighter macro-prudential measures can provide a sufficient offset in the long run.

Risks: As a small, open economy and financial hub, Hong Kong is one of the most vulnerable in Asia to weakness in the global economic outlook. An economic hard-landing in China would be especially detrimental through both trade and financial channels.