Hong Kong’s stock market rally is showing resilience, with JPMorgan Chase expecting the run to extend into 2026, yet its durability could be tested by rising interbank rates, commercial property risks and US-China tensions.
The MSCI Hong Kong Index (MXHK), a gauge tracking 27 large and mid-cap stocks in the city, has risen 26 per cent this year in US dollar terms, the best performance since 2017. And despite the stellar gains, the market remains attractively valued, according to the US investment bank.
The index was still trading below its 10-year average price-to-earnings multiple of 16 times, making it the cheapest in Asia-Pacific excluding Asean, according to JPMorgan’s recent equity strategy report titled Hong Kong’s comeback: early thoughts on 2026 and top picks.
“There are certain headwinds, but Hong Kong’s comeback since 2023 has become more apparent with a robust financial market and stabilising residential property market, while valuations are undemanding versus history and regional peers,” said Wendy Liu, head of China and Hong Kong equity strategy research at JPMorgan, in the report. “We think this [combination] should attract inflows while the ‘de-dollarisation narrative’ stays.”
Liu’s team maintained its end-2025 base and bullish targets for the MXHK Index at 13,000 and 14,000 points, respectively, and projected further upside in 2026.
Assuming consensus earnings growth of 6 per cent in 2025 and 9 per cent in 2026, the bank estimates the index could reach between 14,366 and 16,679 points by the end of next year, representing potential gains of 8 to 25 per cent from current levels.
