HSBC Private Bank is upbeat about Hong Kong’s stock market in its Q1 2026 Investment Outlook: Resilience in a Transforming World, released on Tuesday and forecasting that the benchmark Hang Seng Index will reach 31,000 by the end of 2026.
The Hang Seng Index is expected to remain dominated by the technology sector, with profit growth among tech enterprises acting as a key driver for the Hong Kong stock market’s performance, said Cheuk Wan Fan, chief investment officer for Asia at HSBC Private Bank and Premier Wealth.
“We don’t think AI (artificial intelligence) is in bubble territory,” said Fan. She advised investors to focus on the financing, cash flow, and financial resilience of companies making significant AI investments, while capitalizing on broader opportunities.
She also said that the global wave of AI is driving significant investment in data centers, which has created a substantial demand for the supply of power. “Power sector stocks surpassed expectations in 2025 and are poised for even stronger growth next year”, she said. She also said that investors should focus on opportunities in the financial, industrial, and utilities sectors.
Hong Kong’s innovation sector has attracted numerous listings, fueling steady inflows of Chinese mainland capital via the southbound trading channel — a trend expected to continue into next year, said Patrick Ho, chief investment officer for North Asia at HSBC Private Bank and Premier Wealth.
READ MORE: Hong Kong asks banks to ensure IPO applications maintain standards
“China’s focus on boosting domestic consumption should benefit corporate margins and drive earnings improvement in 2026. Hong Kong’s recovery in retail spending, stabilizing the residential real estate market, increased tourist activities, (and its) robust IPO pipeline and positive wealth effects from the stock market rally are all supporting consumption recovery,” said Ho.
The Bank will maintain an overweight strategy for Asian markets and remains optimistic about Asia’s equity and bond markets, said Ho.
He explained that emerging Asian equities remain relatively undervalued compared to US stocks. The S&P 500’s forward price-to-earnings ratio for the next 12 months has surpassed 22 times, while the forward P/E ratio for emerging Asian markets is below 15 times.
Meanwhile, Everbright Securities International expects major central banks to maintain accommodative policies in the first half of 2026 to support economic growth. And the US may still implement one interest rate cut in the first half of next year, which will support capital flows into emerging markets, benefiting the upward momentum of the Chinese mainland and Hong Kong stock markets.
The institution’s highest index targets for HSI and the Hang Seng Tech Index in 2026 are 30,000 and 6,600 respectively.
Kenny Ng, securities strategist of Everbright Securities International, advised four major noteworthy sectors of Hong Kong stocks — China financials, intelligent technology, energy and nonferrous metals, and local financials.
Contact the writer at akirawang@chinadailyhk.com
