Bank of America Securities issued a research report stating that, given the escalation of conflicts in the Middle East, the bank favors investment directions featuring high yields and the HALO (Heavy Assets, Low Obsolescence) theme. These types of assets are also expected to perform well in a stagflationary environment. Increasing attention on energy independence may drive stronger growth in renewable energy. Conversely, the bank avoids companies that could be adversely affected by persistently high costs of natural gas and coal over the long term.
The bank believes that Hong Kong’s utilities sector tends to demonstrate greater resilience amid rising market uncertainties, with more defensive regulatory returns that are even linked to inflation. Bank of America Securities upgraded CLP Holdings (00002.HK) to a “Buy” rating, setting a target price of HKD 80, driven by growing optimism regarding its free cash flow. This improvement supports a better dividend outlook, with management proving capable of delivering a 1.6% year-on-year increase in dividends per share for FY2025 while maintaining steady long-term earnings growth. The bank considers CLP’s 4.4% dividend yield as the most attractive within its peer group.
