According to Citibank's report, the mainland government aims to shift local economic growth towards more Consumer-led rather than investment-led, and it appears to be responding 'stubbornly' to the USA's trade policies, although it seems open to discussions. The bank prefers domestic related stocks to avoid uncertainties arising from increased trade tariffs. It expects moderate government stimulus policies to boost the local economy, which may be more relevant to the Consumer, Internet, resources, and Technology Industries. The bank believes that the mainland and Hong Kong stock markets do not appear expensive and are slightly below historical averages, thus maintaining a constructive outlook.
The bank has upgraded the Consumer Industry to 'Shareholding' and prefers domestic stocks, hoping to gain potential returns from government stimulus measures; it has downgraded the transportation industry to 'Neutral' based on increased trade tariffs from the USA. The bank also likes large Internet stocks and Technology stocks benefiting from government policy support, adding Atour Lifestyle (ATAT.US) to its priority Buy list for local Consumer stocks in Hong Kong and US markets.
The bank has also raised its year-end target for the Hang Seng Index from 24,500 points to 25,000 points, with a mid-year target of 26,000 points next year. The year-end target for the CSI 300 Index has been lowered from 4,400 points to 4,200 points, with a mid-year target of 4,350 points next year. The year-end target for the MSCI Chinese Index has been raised from 78 points to 79 points, with a mid-year target of 82 points next year.
The table below lists the bank's priority Buy (Top Buy) and priority Sell (Top Sell) stocks in Hong Kong and ADRs:
Priority Buy List:
Tencent (00700.HK)
Huaneng Power International (00902.HK)
Trip.com (TCOM.US)
BYD (01211.HK)
AIA (01299.HK)
Atour (ATAT.US)
Anta (02020.HK)
*The priority Buy list has removed HAIER SMARTHOME (06690.HK)
Priority Sell List:
Master Kong (00322.HK)
HUISHANG BANK (03698.HK)
COUNTRY GARDEN (02007.HK)
CHINA GAS HOLD (00384.HK)
MTR Corporation (00066.HK)
