KGI Asia believes that there is a good chance for the Hang Seng Index to reach 20,900 points in the next six months. In the second half of 2024, the pattern of the optimistic and pessimistic struggle will shift slightly towards bullish factors. These include (1) the combination of real estate policies that accelerate the bottoming out of mainland China's real estate market; (2) active dividend distribution by state-owned enterprises' shareholders; and (3) inflows of mainland China's Northbound funds and overseas funds into Hong Kong stocks with relatively low valuations. Statistics show that the median annual volatility of the Hang Seng Index over the past 10 years is about 6,130 points. Based on the current low of the Hang Seng Index at 14,794 points, KGI forecasts that there is a good chance for it to reach 20,900 points in the next six months, with a potential maximum increase of 22% within a year. As for the valuation, the market expects the earnings per share of constituent stocks in the Hang Seng Index to be HKD 2,045, increasing by 7.5% annually, which is roughly the same as KGI's market outlook in the second quarter. The forecast price-to-earnings ratio corresponding to 20,900 points is 10.22 times, which is still lower than the average price-to-earnings ratio of the Hang Seng Index over the past 10 years. Therefore, we believe that there is still room for the market to go up.