Swiss Bank Predicts Hang Seng to Reach 28,000; Favors AI and Mainland Bank Stocks
On.cc · 1 SOURCESabout 3 hours ago6 MIN
Summary
Swiss private bank Julius Baer has maintained its constructive outlook on Hong Kong equities, with strategist Deng Qizhi (鄧啟志), Head of China Research and Head of Research for Hong Kong, predicting that the Hang Seng Index could climb to 28,000 within the next year . The forecast is underpinned by expected earnings recovery among large Chinese internet platforms and potential AI technology breakthroughs. However, near-term volatility is anticipated as China's economy continues to show a "K-shaped" pattern of divergence, with strong AI manufacturing offsetting weakness in consumption and real estate sectors .
Key Points
- Julius Baer strategist Deng Qizhi forecasts the Hang Seng Index to reach 28,000 in the next 12 months, citing improved profitability among major Chinese internet companies and AI technology developments as primary catalysts
- China's economy exhibits "K-shaped" divergence: AI manufacturing sector demonstrates robust growth while domestic consumption and property market remain sluggish, limiting overall equity market performance
- Chinese mainland bank stocks (內銀股) offering approximately 5% dividend yields remain attractive, particularly to mainland insurance companies unlikely to invest in dollar-denominated bonds
- Mainland internet platform earnings showed modest improvement in first-half results, with more significant recovery expected from Q4 2026 onward due to favorable low-base effects from the previous year
- The US Federal Reserve is expected to implement one additional interest rate increase in 2026, while Hong Kong may not follow suit given current economic conditions and capital flow dynamics
Why It Matters
For Hong Kong investors navigating persistent market uncertainty, Deng's analysis provides a clear roadmap: prioritize AI-driven technology themes for growth potential while using high-dividend mainland bank stocks as defensive positions . The recommendation to consider A-shares over Hong Kong-listed "old tech" internet platforms for AI exposure reflects the reality that Hong Kong's equity market remains heavily weighted toward consumer-facing internet businesses vulnerable to domestic economic cycles . As US interest rate policy continues to diverge from Hong Kong's, the 5% dividend yields on mainland banks offer a compelling yield pickup that could sustain investor interest despite broader market headwinds .
For Hong Kong investors navigating persistent market uncertainty, Deng's analysis provides a clear roadmap: prioritize AI-driven technology themes for growth potential while using high-dividend mainland bank stocks as defensive positions . The recommendation to consider A-shares over Hong Kong-listed "old tech" internet platforms for AI exposure reflects the reality that Hong Kong's equity market remains heavily weighted toward consumer-facing internet businesses vulnerable to domestic economic cycles . As US interest rate policy continues to diverge from Hong Kong's, the 5% dividend yields on mainland banks offer a compelling yield pickup that could sustain investor interest despite broader market headwinds .