HSBC published a research report indicating that the economic outlook in China has improved. The recent shift in policy tone has confirmed the central government's determination to stabilize the economy, which is a positive sign for the A-share market. The Hong Kong market is also expected to benefit further, with the local economic outlook likely to improve. The bank upgraded the rating for Hong Kong stocks from "neutral" to "Shareholding," while raising its target for the Hang Seng Index at the end of the year from 23,420 to 23,870.

HSBC noted that local Consumer demand in Hong Kong is under pressure, mainly due to the slowdown in the tourism industry from mainland China and changes in the Consumer spending patterns of Hong Kong residents. However, the commencement of the Federal Reserve's easing cycle and the Hong Kong government's initiatives to stimulate the tourism industry and support the Real Estate market should provide strong support.

In the local Stocks market, trading volume in the Hong Kong stock market has increased to an average of over 10 billion USD per day, while net capital inflows from the south have surged to their highest level since 2019, currently accounting for nearly a quarter of the market turnover. The momentum in the new stock market is also strong, and measures to accelerate the listing of A-share companies in Hong Kong through IPOs will drive more companies to go public in Hong Kong this year.

Regarding the local Real Estate market, HSBC forecasts that property prices in Hong Kong will rise by 5% this year, reversing the declining trend since 2022. Additionally, a series of supportive measures by the Hong Kong government, such as relaxing mortgage conditions, will help restore buyer confidence in the local property market.

In terms of loan demand, although loan demand in Hong Kong remains weak, local Banks are expanding their wealth management Business to seize fee income opportunities. HSBC expects that local Banks will enhance capital returns through share buybacks or dividends. Moreover, utilities are considered a defensive Industry, with stable income prospects and a dividend yield of 5% to 6%, which may be attractive to investors, especially in the context of declining interest rates.