HK - Market Strategy 04 (Apr 25 - Dec 27)

[winston]

Stanchart Raises HSI Target to Max. 30,000, Urges Overweight in Gold & Global Equities

While the US government shutdown saga remains unresolved, Lloyd Chan, Standard Chartered Hong Kong's Head of Investment Strategy, said that the Fed has resumed rate cuts and American companies have announced a series of multi-year AI investment plans.

As market earnings forecasts remain too conservative, the bank has upgraded its view on US equities to Overweight.

The bank has also raised its outlook on gold to Overweight, expecting that the Fed's easing cycle, coupled with rising demand from China and India, will support gold prices. Gold is expected to remain strong and could challenge the USD4,100 per ounce level.

As for Hong Kong, Raymond Cheng, Chief Investment Officer for North Asia at Standard Chartered, noted that the HSI has broken through the bank's previous forecast range of 24,000-26,000 points and is now entering a consolidation phase.

The upcoming fourth plenum is estimated to shed light on the direction of the 15th Five-Year Plan. With policy support and easing domestic competition, the market may revise up its earnings growth forecasts.

Accordingly, the bank has raised its 12-month target for the HSI to between 28,000 and 30,000 and kept the Overweight position on global equities.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

<Research>Haitong Int'l Predicts H-shrs to Rattle amid Intensified US-CN Tensions; ST Volatility Won't Alter Uptrend

Prior to the US-China talks in Spain, the current round of US-China trade tensions has already escalated, Haitong International's research report commented.

The US BIS has added 23 Chinese entities to its list, while China has announced an anti-dumping investigation into US-made analog chips, after which the US is pushing to expand sanctions on Russian energy.

The subsequent US-China talks in Spain showed overall progress, with ongoing negotiations regarding TikTok.

Haitong International noted that despite positive notes from both sides, no substantial breakthroughs were achieved on core issues, with key progress likely pending a meeting between the two countries' leaders.

Therefore, the next phase of market catalysts was expected to rely more on domestic policy developments.

Haitong International's expectations following the escalation of trade tensions aligned with those during the reciprocal tariffs in early April, suggesting limited systemic risk and continued negotiation space.

The escalation reflected Trump's dissatisfaction with the slow progress since the Spain talks and China's ongoing countermeasures, particularly the strong reaction to the rare earth technology export controls set to be implemented on December 1.

This measure may be a strategic move by China in response to US-Brazil rare earth cooperation.

Prior to this, both countries had communicated on key issues like TikTok, purchasing US soybeans, and rare earth exports.

Thus, the broker assessed that the current trade escalation is more likely Trump's negotiation pressure ahead of the leaders' meeting.

Once this round of tensions de-fuses, maintaining current tariff levels between the US and China remains highly probable.

H- and A-share technology sectors experienced considerable fluctuations last week after substantial gains earlier. SMIC (00981.HK) saw a sharp correction over two consecutive days. Haitong International assumed that the technology sector will enter a phase of differentiated fluctuations in the short term.

In a nutshell, if the Chinese stock market opens sharply lower and continues lower on Monday (13th), it could trigger a short-term uptick.

That said, due to the uncertainty surrounding the meeting between the Chinese and US presidents, the market is likely to remain shaky in October.

The market was expected to resume its uptrend after the Fourth Plenary Session of the 19th CPC Central Committee in late October further clarifies policy direction and Sino-US trade frictions gradually ease.

Source: AASTOCKS Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

<Research>CLSA Says Limited Downside Pressure on A-shrs from US-CN Trade Conflict, Strategically Positive on H-shr Allocation Potential

Although US-China trade negotiations seem to have hit snags, the complementary nature of the two economies is anticipated to keep both at the negotiating table, rather than reverting to the extreme scenario seen in April, CLSA commented in a research report.

This suggests that the downside for the Chinese stock market is relatively limited, opined the broker.

In the short run, A-share volatility remains lower than that of H-share. Yet, in the long run, CLSA maintains a strategically positive view on the potential allocation in the H-share market and will continue to wait for favorable entry point.

Related News: Haitong Int'l Predicts H-shrs to Rattle amid Intensified US-CN Tensions; ST Volatility Won't Alter Uptrend

CLSA viewed that the long-term allocation in the H-share market remains strategically attractive, with higher quality companies in key industries such as Chinese internet (AI), semiconductors, biotechnology, and resources.

The Southbound Overbought Index (SOI) tracked by CLSA continued to rise even as the Hong Kong market wanes.

Although a 1+ level has historically signaled smart money buying at good prices, it is now at 0.6. Therefore, Citi suggested remaining patient, waiting for clearer signals.

Source: AASTOCKS Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

Morgan Stanley issues dip-buying call on Chinese stocks even as savings rotation stalls

Correction in MSCI China Index presents buying opportunity despite the moderating migration of household savings to stocks, bank says

by Zhang Shidong

A 10 to 15 per cent correction in the MSCI China Index, would present a buying opportunity, especially amid signs that a meeting between Chinese President Xi Jinping and his US counterpart Donald Trump would still take place by the end of the month, as well as a potential upgrade of earnings forecasts, analysts led by Laura Wang at the American investment bank wrote in a research note on Thursday.

“We continue to consider such a tactical truce as our base case because we believe that both countries still rely on the other side for critical inputs, namely tech versus rare earths, as they engage in the current stage of competition, which focuses on artificial intelligence and technology,” the report said.

Source: SCMP

https://www.scmp.com/business/china-bus ... pe=section

[winston]

Goldman sees 30% upside for Chinese stocks by 2027 on policy support, earnings growth

China’s AI advance and a rebalancing of capital flows could also serve as potential drivers of stocks despite US tensions, bank says

by Zhang Shidong

Chinese stocks could rise by about 30 per cent through the end of 2027, buoyed by a confluence of factors from policy tailwinds to re-acceleration of earnings growth and reallocation of global and household assets, according to Goldman Sachs.

The projected gains would be driven by a compound annual profit growth of 12 per cent and a valuation expansion between 5 and 10 per cent.

Goldman’s forecast came at a time when a blistering run in Chinese stocks showed signs of faltering amid a resurgence of tensions between Beijing and Washington.

The MSCI China Index has fallen almost 5 per cent from an October 2 high after the US threatened a new 100 per cent tariff on Chinese imports in response to restrictions on rare earth exports placed by Beijing.

Before the pullback, the gauge had rallied 41 per cent this year on China’s breakthrough in artificial intelligence, Beijing’s determination to address deflation and a migration of bank savings.

Source: SCMP

https://www.scmp.com/business/china-bus ... pe=section

[winston]

Morgan Stanley predicts mild gains in China stocks in 2026 as blistering rally cools

First call by a Wall Street bank predicts gains between 3.4 and 4.6 per cent from current levels for gauges including the Hang Seng Index

by Zhang Shidong

Morgan Stanley said its year-end target for the Hang Seng Index was 27,500 and that for the CSI 300 Index of Chinese onshore stock was 4,840, suggesting gains of 3.5 per cent and 4.6 per cent, respectively, from current levels.

Source: SCMP

https://www.scmp.com/business/china-bus ... pe=section

[winston]

<Research>BOCOMI Foresees HK Bourse to Keep 'Slow Bull' into 2026

The global economy resilience in 2025 broadly beats expectations as set in the beginning of the year; the AI technology cycle is not yet over; and policy consistency is maintained, a report by BOCOM International wrote.

The strategic moves made in 2025 lay the foundation for continued progress in 2026.

Whether it's the continuation of loose monetary policy, the proactive fiscal policy, or the strategic focus of industrial policy, all will continue to play a role in 2026, serving as important anchors for investment strategies, opined the broker.

Looking ahead to 2026, as the external environment returns to order and certainty increases, risk appetite will rise, and the core logic of asset allocation will shift towards a balance between offense and defense.

Regarding Hong Kong bourse, BOCOM International pointed out that earnings are in sight, and a slow bull market will persist.

Valuations are within a reasonable range, offering outstanding value; the liquidity environment continues to improve, with southbound and overseas funds returning; structural highlights of the Chinese economy, including AI technology, anti-involution, and domestic demand recovery, are expected to begin to materialize in terms of earnings.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

Hong Kong stocks set to top 30,000 level in 2026

by Helen Zhong

In 2025, despite the volatility driven by the Sino-US trade war and rising geopolitical tensions, Hong Kong shares jumped over 27 percent to 25,630, marking the best performance in eight years, while the tech index climbed over 23 percent.

The appreciation of the yuan is expected to become the new driver for the stock market, especially benefiting heavy-asset sectors such as aviation and oil.

Source: The Standard

https://www.thestandard.com.hk/market/article/320589/

[winston]

Why investors should remain bullish on Hong Kong, mainland stocks in 2026

by Nicholas Spiro

While most Wall Street banks remain bullish on Chinese stocks, some have turned more cautious.

Morgan Stanley believes 2026 will be “a year of stabilization after 2025’s high returns”, while Citigroup downgraded its recommendation for the MSCI China Index from overweight to neutral due to the weakness of China’s economy and concerns about the outlook for corporate earnings.

However, a cautious view on Chinese equities proved costly over the past two years. Last year, the MSCI China Index had its best year since 2017, outpacing the benchmark S&P 500 index by the widest margin in eight years.

Despite the fierce rally, the MSCI China Index still stands around 30 per cent below its peak in February 2021, underscoring the potential for further gains.

Source: SCMP

https://www.scmp.com/opinion/china-opin ... pe=section

[winston]

<Research>CGS Expects HK Stock Mkt Trading Activity to Continue Rising w/ Focus on Tech & Consumption Sectors

The HSI jumped up 2.01% last week (29 December 2025 to 2 January 2026), while the HSTECH leaped by 4.31%.

In terms of industry sectors, among primary industries, seven sectors inclined and four sectors fell last week.

Looking ahead, under the resonance of multiple positive factors, the trading activity of the Hong Kong equity market is expected to continue rising, with the overall market expected to fluctuate while rising, CGS added.

In terms of allocation, investors are recommended to focus on 2 sectors, naming the technology and consumption sectors.

The technology sector remains the main investment theme in the medium to long term, with multiple favorable factors such as industrial chain price hikes, M&A and domestic substitution, and is expected to fluctuate while rising.

The consumption sector is expected to continue benefiting from policy support, and current valuations are relatively low, with larger medium to long-term upside potential.

Attention should be paid to the strength of policy implementation and improvement in consumption data.

Source: AASTOCKS Financial News

https://www.aastocks.com/en/stocks/news ... -news/AAFN