Bullish investors expect Hang Seng to test 30,000

Business | Kevin Xu 13 Jan 2021

Investment houses are bullish over Hong Kong equities, with some expecting the Hang Seng Index to test 30,000 points this year.

Their predictions came as the benchmark index closed 368 points higher at 28,276 yesterday after dropping 126 points in the morning trading session.

Anli Securities remains bullish on most asset classes supported by ample liquidity, fiscal policies and recovery of global economy.

"Hong Kong market is likely to benefit from the excess liquidity flowing from the US market to Asian markets. Hong Kong would be the first priority for investors to allocate in Chinese assets," the company said in a statement. "The abundant liquidity coupled with the improved market sentiment should support the HSI to reach 30,475 in the first half of 2021, offsetting the political uncertainty that shrouded Hong Kong over the past two years. And the performance in the second half of 2021 is likely to hinge on global central banks' policy stances."

Meanwhile, UBS has set a target range of between 28,500 and 30,000 points for HSI, says Wendy Liu, head of China strategy at UBS.

And Morningstar's director of equity research in Asia Lorraine Tan says that while Sino-US relations are likely to remain challenging and a risk for Asian markets, "we believe President-elect Biden's multilateral approach to foreign policy is more predictable, reducing market uncertainty."

"However, robust US market valuations may be a headwind for Asia markets as investors are pricing in multiple positives in vaccine availability and take up rates, a sustained low federal-funds rate through 2024, and further fiscal stimulus. Asian markets may be supported by a moderate rise in earnings estimates," she added.

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