UBS Global Wealth Management is underweight Hong Kong equities.
Hong Kong is expected to record economic growth under 1 percent, said Min Lan Tan, head of chief investment office, Asia Pacific of UBS Global Wealth Management.
UBS is overweight mainland A-shares with an estimation that China's economy will be relatively stable this year, preferring e-commerce and consumption stocks.
Tan expects local companies will have low single-digit earnings growth, compared with overall average profit growth of 10 percent for Asian companies.
She also predicts local home prices to slide by 5 percent this year.
UBS also forecasts that People's Bank of China will cut the required rate of return by 50-150 basis points by the end of this year and China's GDP growth could be around 6 percent.