HSBC Research issued a report stating that the market in this Year of the Horse will focus on five key themes, including solar and hydrogen energy, the 15th Five-Year Plan, power grids, and green fuels. Additionally, defensive sectors remain valuable, with nuclear energy also worth monitoring.
The bank noted that the expansion of artificial intelligence infrastructure into space is driving new demand for solar cells. It believes that specific equipment manufacturers within the solar supply chain and hydrogen energy producers serving as rocket fuel will benefit from this trend. Meanwhile, SpaceX’s initial public offering (IPO) and Chinese policy developments are catalysts worth watching.
The report highlights that China's ongoing anti-internal competition measures, despite uncertain demand, will continue to adjust overcapacity in renewable energy equipment through supply consolidation. For the petrochemical industry, the bank anticipates more coordinated production cuts this year.
The bank also expects accelerated investment in ultra-high voltage (UHV) power grids during the 15th Five-Year Plan. Furthermore, nuclear energy, supported by policy, is becoming a critical alternative fuel option, while other emerging fuels such as green hydrogen, methanol, and ammonia are showing growth momentum.
The bank believes that defensive assets typically outperform the broader market amid volatility. Therefore, it emphasizes quality and dividend growth as criteria for stock selection.
The bank adopts a more cautious stance toward Chinese electric utility companies due to weak electricity demand and supply pressures causing continued declines in electricity prices. With price floors being removed, both thermal power and renewable energy firms will face dual challenges in pricing or utilization rates. The bank raised its target price for CIMC Enric (03899.HK) from HK$11.6 to HK$12.5, maintaining a “Buy” recommendation. It also assigned “Buy” ratings to GCL Technology (03800.HK), Pinggao Electric (600312.SH), and Cheung Kong Infrastructure (01038.HK), with target prices of HK$1.8, RMB 28.3, and HK$70, respectively.
