China Stocks Poised for 7-10% Upside by 2024, HSBC Analysts Say
In a recent report, HSBC analysts predict that China stocks still have room for growth, with a potential 7-10% upside by the end of 2024. This optimistic outlook is driven by new policy tools and fiscal support from the People's Bank of China (PBoC).
The PBoC has implemented measures such as swap facilities for securities brokers, mutual funds, and insurance companies to increase market liquidity. These new policy tools are expected to support a market rebound later this year, according to HSBC.
Additionally, the central bank's special relending program allows commercial banks to provide loans for share buybacks, which could further boost stock prices. China's recent Politburo meeting emphasized the importance of supporting growth through fiscal and monetary policies, signaling stronger government support for the stock market.
While HSBC has adjusted its end-2024 target for the Shenzhen Composite (SZCOMP) slightly lower, the targets for the Shanghai Composite (SHCOMP) and CSI 300 remain unchanged, suggesting a potential upside of 7-10%. Despite the current economic challenges, HSBC remains positive about China's equity market, especially in light of anticipated Federal Reserve rate cuts.
The analysts believe that a Fed cut cycle, barring a US recession, could lead to a 25% increase in China equities, with growth stocks likely to outperform value stocks. HSBC has also identified ten stocks across five investment themes that are well-positioned to benefit from China's growth policies and global expansion, including Roborock, Mindray, BYD, and Xiaomi.
In conclusion, investors may want to consider the potential for growth in China stocks, supported by favorable policies and government initiatives. The market outlook appears promising, with opportunities for significant gains in the coming years. It is essential to stay informed and consider expert analysis when making investment decisions to capitalize on these opportunities and secure financial growth.
