FSMOne (Hong Kong) General Manager Chan Ka Long stated at a press conference that, based on a target price-to-earnings ratio of 11 times, the Hang Seng Index's target levels for the end of this year, 2027, and 2028 are approximately 25,000 points, around 27,000 points, and 29,000 points, respectively. Using a 12-times target P/E ratio, the target levels for the MSCI China Index this year and 2028 are 79.2 and 96, respectively.
FSMOne (Hong Kong) portfolio management and research analyst Li Xu noted that the potential inclusion of high-quality stocks, such as the strongly performing AI model stocks MiniMax (00100) and Zhipu AI (02513), into the index could help the index regain upward momentum. Combined with an optimistic outlook for continued strong activity in Hong Kong's IPO market and sustained northbound capital inflows, this supports the 2028 target of 29,000 points.
Chan Ka Long also believes the AI hardware frenzy will persist, with leading semiconductor and memory manufacturers continuing to outperform in the stock market. Regarding Hong Kong stocks, with supportive factors such as the accelerated commercialization of AI models, there remains room for a revaluation of technology company valuations. Additionally, it is anticipated that with clearer regulatory signals, the price war in the food delivery sector may ease, potentially leading to improved performance for major internet platforms and supporting an earnings recovery in the technology sector.
On the U.S. front, he expressed the belief that the current cycle of interest rate cuts has concluded. This view is based on the significant impact of volatile energy prices on inflation and the need to monitor the gradual rebound in housing CPI as a genuine underlying concern. With the new Federal Reserve Chair, Lael Brainard, holding a distinctly dovish stance, conflicts among Fed officials are expected to intensify.
Chan Ka Long opined that inflationary pressures will keep long-term bond yields elevated, while short-term bond yields are also rising due to unexpected expectations of rate hikes. Currently, the yield curve has largely normalized. Investors may prioritize short-term bonds while also extending duration by adding U.S. Treasuries with maturities of 5 to 10 years. Investment-grade corporate bonds continue to be viewed favorably.
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