Chief Executive Leung Chun-ying, the top Hong Kong government official, announced the cancellation of an investment visa scheme, which was designed to grant residency to overseas investors.
"We don't really need to attract capital investment at the moment. ... What we need now is talent, rather than capital," he said at a press conference after the speech, as quoted by local media.
The announcement that Jan. 14 was the deadline for investment visa applications came as a bolt out of the blue and prompted applicants to form long queues at application windows until late that night.
The Capital Investment Entrant Scheme granted residency to those who invested 10 million Hong Kong dollars ($1.31 million) or more in financial products designated by the Hong Kong government, such as stocks, bonds and insurance.
The Hong Kong government introduced the scheme in October 2003 to help the local economy, which had been hit hard by the outbreak of severe acute respiratory syndrome (SARS).
Hong Kong is known to have a tax system that is friendly to the wealthy. It has no inheritance and gift taxes, and levies no capital gains tax. The investment visa scheme made Hong Kong an even more attractive place for wealthy people to migrate to.
A total of some 42,000 people applied for investment visas by the end of 2014 and about 26,000 of them acquired such visas. The amount of investments made by overseas investors under the scheme totaled HK$216 billion.
As a reason for its scrapping of the scheme, the Hong Kong government has officially cited a spike in property prices.
Property prices in Hong Kong have continued to hit fresh record highs due to the inflow of money from mainland China. There is strong discontent among young people who cannot afford to purchase homes after marriage. This is the root cause of a recent campaign launched by students and other protesters to occupy central areas of Hong Kong.
But some observers believe that the Chinese government has played a behind-the-scenes role in Hong Kong's decision to scrap the investment visa scheme.
The scheme did not apply to residents in mainland China. But they were allowed to file visa applications as an exception if they had already acquired permanent resident status in other countries.
Visa application agencies recommended that their customers in mainland China first acquire permanent resident status in some African countries, such as Gambia and Guinea-Bissau, where it is possible to apply for such status by submitting the necessary documents, without actually going there.
Of the approximately 42,000 people who applied for investment visas by the end of 2014, some 38,000 people, or 90%, had Chinese nationality and permanent resident status in other countries.
One financial industry official also said that there are many investment visa acquirers who shuttle between Hong Kong and the West, instead of actually residing in Hong Kong.
In China, some government officials and executives at state-owned companies are known as "naked officials" -- people who amass personal fortunes and then shift their family and wealth overseas so they can flee the country at any time.
Hong Kong's abrupt scrapping of the investment visa scheme is seen as part of Beijing's efforts to tighten the screws on such officials in China.