STOCKS | Bank of East Asia Wealth Management Cuts Hang Seng Index Target to 27,100

A strategist at Bank of East Asia Wealth Management lowered the Hang Seng Index target for this year to 27,100 from 29,000.

According to Jin10, investment strategist Chen Weicong said heavier AI spending by technology companies, along with rising production costs for energy and memory chips, has left the earnings recovery of heavyweight internet and consumer stocks weaker than previously expected. He said this prompted him to cut his earnings forecast for the Hang Seng Index this year.

Chen reiterated that the forecast price-to-earnings ratio for Hong Kong stocks is currently about 10 times, slightly below the roughly 10.5 times average over the past 10 years. He said valuation appeal is gradually emerging and that an excessive short-term market decline could present an opportunity to accumulate positions.

He expected the broader market to see a phased rebound in the second half of the year, but said the rebound would not last long. He added that if the July Central Political Bureau meeting releases more growth-stabilizing policies, it could become a potential catalyst for a rebound.