Hong Kong wants to attract more investment

Leader Donald Tsang said taxes would be cut by 1 percentage point, to 16.5% for firms and 15% for individuals, in the first policy speech of his new term.

In addition, HK$250bn ($32bn; �15.7bn) is to be spent on infrastructure.

Hong Kong's boom comes amid wider growth in Asia that has sent stock indexes to new highs. Earlier in the day, India's Sensex set a new record.

The Mumbai-based index added 378.79 points or 2.07% to reach an intraday high of 18,659.03, ahead of a record level set a day earlier.

Robust economy

In announcing the tax cuts, Mr Tsang said: "We will consider further profits tax relief if our economy remains robust and our public finances stay sound."

The newly-announced infrastructure plans include links between Hong Kong, which became a Chinese "special administrative region" in 1997, and China itself by rail, as well as more local transport.