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Citi expects the Hang Seng Index to rise 12.1 percent to 29,600 by the end of 2026, preferring A-shares over Hong Kong stocks due to their higher technology weighting, according to Pierre Lau, Citi's China equity strategist.
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The end-2026 index target was trimmed by 1.3 percent, reflecting a downward revision in 2027 expected Hang Seng Index earnings per share growth by 0.4 percentage points to 11.9 percent. For the first half of 2027, Citi has set a higher Hang Seng Index target of 30,500.
Lau highlighted two key reasons for preferring A-shares: a larger exposure to tech sectors and more accommodative liquidity conditions amid lower interest rates in mainland China
“Technology remains our top sector call for the second half of 2026 as a key driver of market outperformance,” Lau stated. He added that Beijing is unlikely to roll out significant near-term stimulus, as the economy is on track to meet its full-year growth targets.
Among key calls, Citi favors copper, aluminum and lithium in that order within basic materials. The bank’s three key investment themes for the second half of 2026 are technology, exports and Initial Public Offerings.
Looking ahead, Citi remains constructive on both China’s A-share and Hong Kong stock markets, expecting further upside in the second half of the year.
