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Citigroup on Tuesday lifted its end-year forecast for Hong Kong’s benchmark Hang Seng Index to 26,800, citing improved earnings growth and policy support from Beijing.
The bank’s new target implied a 3.3 per cent gain from current levels, and Citi said it expected the index to climb to 27,500 by mid-2026 and 28,800 by the end of next year. The Hang Seng Index closed at 25,938.13 on Tuesday.
“We prefer [the] H-share to [the] A-share market, as the former is more sensitive to Fed rate cuts ahead,” said Pierre Lau, China equity strategist at Citigroup. A shares are traded on mainland bourses and denominated in yuan, while H shares are issued by mainland companies and are traded in Hong Kong. He added that the revisions were supported by expectations for higher 2026 earnings-per-share growth for the index and fresh catalysts from Beijing’s coming five-year economic plan. He also said major onshore and offshore indexes were “inexpensive”.
Citi also raised its forecast for 2026 earnings growth for Hang Seng Index companies to 9.8 per cent from 8.1 per cent, compared with an expected 0.9 per cent gain this year. It said sectors like healthcare, insurance and advanced manufacturing would benefit from Beijing’s new policy priorities.
The upgraded forecasts come as China’s economy has been showing a mixed picture. Gross domestic product on the mainland grew 5.3 per cent in the first half, exceeding the government’s 5 per cent target, while exports rose 7.2 per cent from a year earlier in July. But consumer prices have remained flat and property prices have continued to slide.
Citi’s revision came on the heels of a similar move by HSBC Holdings late last month. The bank lifted its year-end target for the gauge to 27,010 from 25,830, implying a 4.1 per cent gain from the current level. HSBC said strong southbound inflows, household cash reserves and a recovery in initial public offering activity in Hong Kong supported its revision.
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