Hong Kong's equity benchmark Hang Seng Index is likely to settle at around 27,140 points by the end of this year as global uncertainties linger on, according to Singaporean banking giant DBS Bank.
Frank Lee — senior investment strategist at DBS Bank Hong Kong — said the HSI is expected to fluctuate between 27,000 and 29,000 points in the second half of 2019, and DBS is especially overweight on the high technology and consumer sectors, as well as mainland insurance stocks.
I foresee a heavier inflow of overseas capital that would provide long-term support for the mainland’s equity market
senior investment strategist at DBS Bank Hong Kong
The key factors that will continue to affect market sentiment are the future direction of US interest rates, and the outcome of the Sino-US trade negotiations, he said.
The US Federal Reserve is anticipated to cut rates once in the third quarter of this year, which could support the market by offering adequate liquidity.
Meanwhile, the Chinese mainland recorded its slowest pace of growth in the second quarter as the Sino-US trade tensions prolonged. The 6.2 percent GDP growth was within market expectations, but still down from a 6.4 percent expansion in the first quarter.
Lee said the effects of the mainland’s tax and fee cuts announced in April to stimulate the economy have surfaced as reflected in the latest retail sales figures.
Along with further inclusions of A-shares in the Morgan Stanley Capital Index in future, Lee said he foresaw a heavier inflow of overseas capital that would provide long-term support for the mainland’s equity market.
The benchmark Shanghai Composite Index could find support at around 2,850 points in the second half of the year, he said.
Hong Kong’s HSI, which dived over 200 points in the morning session on Monday, closed up 0.29 percent, or 83 points, at 28,554.88.
Linus Yip Sheung-chi — chief strategist at First Shanghai Securities — said that despite last Friday’s weak closing, which was dampened by the mainland’s lackluster import-and-export data, equity markets on the mainland and in Hong Kong managed to regain early losses on Monday, boosted by the latest mainland GDP growth and retails sales data for the second quarter.
Yip is optimistic, at least, about the Hong Kong stock market’s short-term outlook as investors are generally positive about the upcoming financial reporting season of companies listed in the city.
He expects mainland insurance, securities and consumer stocks to outshine their listed counterparts in the SAR.
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