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<Research>HSBC Research: Increased Confidence in HK Mkt; Banking/ Real Estate Sectors Favored
Recommend 20 Positive 32 Negative 9 |
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HSBC Global Investment Research indicated heightened confidence in the Hong Kong market, propelled by growth recovery, abundant liquidity, reasonable valuations, and attractive dividends. Herald van der Linde, Head of Equity Strategy, Asia Pacific at HSBC, stated that the researcher has maintained an upbeat view on the Hong Kong market for a long time. With key support factors solidifying, the researcher has become more confident. One emerging momentum stems from the real estate market at a turning point, with property prices hiking 5% in 2025, arresting the total 25% slump over the past two years. The researcher’s real estate team recently raised this year's growth forecast to 7%. Meanwhile, as residents' confidence in the property and stock markets recovers, the growth rate of fixed deposits has slackened. Consumption momentum is also evident, as retail sales grew over 6% YoY in the past three months, reflecting an increase in residents' willingness to spend. The stabilizing residential market, recovering consumer confidence and spending growth form a positive cycle, benefiting corporate earnings growth. As the residential property market warms up, corporate earnings are gradually improving. The banking sector continues to benefit from wealth management, growing mortgage demand, and a high-interest-rate environment. Overall, these factors could drive a 10% earnings growth in 2026, with steep upside risks as macro conditions improve, and recent earnings forecasts have been raised. Despite the Hong Kong market experiencing its first valuation expansion in five years last year, current valuations remain reasonable. High dividend yields are particularly attractive in Mainland China's low-interest-rate environment, and sectors like banking and real estate offer more allocation value compared to their Mainland counterparts due to improved earnings or higher yields. The researcher maintained an Overweight rating on the Hong Kong stock market, setting the FTSE Hong Kong Index target for the end of 2026 at 1,060, implying a 14% upside potential for the year. AASTOCKS Financial News Website: www.aastocks.com |
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