It is expected that the profit growth of Hong Kong stocks next year may be better than this year, thus the outlook for Hong Kong stocks remains positive, and further increases in the Target Price in the future cannot be ruled out.
According to the Zhithun Finance APP, Citigroup raised the Target Price for the Hang Seng Index last month. Liu Xianda, a strategist for Chinese stocks at Citigroup, believes that the situation in the Middle East has little impact on Hong Kong stocks, coupled with clearer developments in tariffs compared to before, and the global major central banks reducing interest rates also lowers capital costs. It is expected that profit growth of Hong Kong stocks next year may be better than this year, thus the outlook for Hong Kong stocks remains positive, and further increases in the Target Price in the future cannot be ruled out.
Earlier, Citigroup raised the Target Price for the Hang Seng Index to 25,000 points by the end of this year, and if the China-US relationship improves later this year, the Target for the first half of 2026 is 26,000 points.
Liu Xianda stated that although the instability in the Middle East may drag down market sentiment, it simultaneously brings opportunities for buying Hong Kong stocks at low prices, and China is currently in a deflationary period. The inflation caused by rising oil prices may not necessarily be a bad thing for China.
He mentioned that attention should be paid to corporate earnings reports in July and August, while the focus for the fourth quarter and next year would be the "14th Five-Year Plan," as investing in Chinese stocks places great importance on national policies. It is expected that authorities will stimulate economic growth through XINJINGJI, with sectors such as Medical care, pension, Technology research and development, education, and cultural tourism expected to benefit from national policies.
Citigroup has given an increased Shareholding rating to consumer stocks, as they are less affected by rising overseas trade tariffs, and government's stimulation measures and subsidies are expected to boost local consumption. Regarding industry competition issues, Liu Xianda pointed out that when selecting stocks, attention should be paid to competitive factors, recommending to choose larger, stronger companies with less competition in the industry.
Citigroup's latest preferred stock list includes Tencent (00700), Huaneng Power International (00902), Trip.com (TCOM.US), BYD (01211), AIA (01299), Anta (02020), Master Kong (00322), HUISHANG BANK (03698), COUNTRY GARDEN (02007), CHINA GAS HOLD (00384), and MTR Corporation (00066).
