Standard Chartered’s (2388) Wealth Solutions Chief Investment Office forecasts the benchmark Hang Seng Index to reach 26,600 points over the next 12 months.
The index could climb to 28,000 to 29,000 if Chinese artificial intelligence policy support increases or oil prices ease to about US$70 (HK$546) per barrel, said Raymond Cheng, chief investment officer for North Asia at Standard Chartered.
On oil prices, the bank raised its three-month forecast for New York crude to US$100 per barrel and its 12-month forecast to US$80 per barrel.
Cheng also said that if geopolitical tensions worsen, regulatory sanctions escalate, or oil prices break above US$120, the Hang Seng Index target could be lowered to 21,500 to 22,500 points, though the probability is relatively low.
The bank expects the 10-year US Treasury yield to hold at 5 percent to 5.25 percent in the near term before easing to 4.75 percent to 5 percent over the next 12 months, noting that current levels offer an attractive entry point for investors to position in the bond.
As the US Federal Reserve further tightens monetary policy, Cheng expects the US dollar index to reach 100.2 in three months and 98 in 12 months, with the Fed raising rates another 50 basis points before mid-next year, before shifting to cuts in the second half as inflation moderates.
He also expects the European Central Bank to raise rates once more and the Bank of Japan up to three times.
In addition, the bank expects the offshore yuan to reach 6.7 in the next three months and 6.67 in the next 12 months.
Lloyd Chan, head of investment strategy for Hong Kong at Standard Chartered, expects the People's Bank of China to continue guiding moderate appreciation through its central parity pricing.
Chan noted that mainland exports grew 25 percent year on year in August, maintaining high-speed growth for four consecutive months, with high-tech exports continuing to grow. He expects the trade surplus to continue rising, providing structural support for the yuan exchange rate.
