Source: Zhitong Finance
KGI Asia said that looking ahead to 2024, under the normal scenario, it reflects the 5-year average predicted price-earnings ratio of 9.3 times, corresponding to the Hang Seng Index target price of 19,260 points; if the trend changes, the worst scenario of the Hang Seng Index may return to a price-earnings ratio of 7.3 times, corresponding to the target price of the Hang Seng Index of 14,500 points. On the global macro side, KGI Asia predicts that the Fed will begin cutting interest rates in mid-2024, and there is an opportunity to cut interest rates by 1%, which is higher than the 0.5% estimated in the Fed's bitmap. The main reason is that the Fed may underestimate the possibility that the economy will decline into recession. Retail sales in mainland China are expected to improve next year. Under optimistic circumstances, the year-on-year increase for the whole year will be around 6%.
According to the bank, the Hang Seng Index target price forecast described above is mainly based on 1) the end of the interest rate hike cycle; 2) in addition to capital flowing into non-US stock markets due to the fall in the US dollar, the recovery of the RMB also helps the central government to make flexible use of monetary policy; and 3) the central government is driving up the deficit rate to boost the economy.
KGI recommended eight target stocks, which were the ones that benefited from interest rate hikes later:$TENCENT (00700.HK)$, the target price is HK$400,$KUAISHOU-W (01024.HK)$, the target price is HK$69,$BIDU-SW (09888.HK)$, with a target price of HK$146; stocks benefiting from the recovery in industry prosperity:$SHENZHOU INTL (02313.HK)$, the target price is HK$95,$GALAXY ENT (00027.HK)$, the target price is HK$49,$LENOVO GROUP (00992.HK)$, the target price is HK$10.8; the category for stability and victory:$CHINA MOBILE (00941.HK)$, the target price is HK$72,$SPDR Gold Trust (02840.HK)$, the target price is HK$1,660.
Editor/Jeffrey