Strategist predicts Hang Seng at 31,000 by year endBusiness | 27 May 2019 4:27 pm
The Hang Seng Index will climb to 31,000 points at the end of this year, supported by better-than-expected corporate earnings growth, HSBC Private Banking, has forecast.
HSBC Private Banking expects that the United States will not reduce interest rate this year due to the low unemployment rate, low inflation and solid economic growth in 2019. But it projects two interest rate cuts in September and December next year.
In the events of 25 percent tariffs on an additional US$325 billion of Chinese exports to the US, China's GDP growth this year could weaken by 1.2 percentage points if no additional stimulus is introduced. The US GDP will growth will also decline by about 0.3 percentage point, the bank says.
Fan Cheuk-Wan, chief market strategist, Asia, at HSBC Private Banking, says the bank trimmed its overweight allocation to Chinese equities by half, but maintains a small overweight position due to the tailwind of Beijing's policy stimulus, continued structural reforms and strong earnings growth.
The bank forecasts yuan will weaken to around 6.95 per US dollar in the second and third quarters.
It also expects global GDP to slow down to 2.4 percent this year and in 2020 with the US and Chinese GDP growth falling to 2.4 percent and 6.6 percent in 2019, respectively.
Hong Kongs's economy is projected to slow down to 2.7 percent in 2019 and 2.5 percent in 2020.