East Asia Securities: Trump Tariff Ruling's Impact on Hong Kong Stocks Limited; Forecasts HSI to Reach 28,000 in Q1, Bullish on Advanced Manufacturing and Tech Shares

A U.S. court has yet to issue a ruling on former President Trump's extensive tariff policies, with the next window for a tariff decision being this Wednesday, January 14. Andy Chan, Senior Investment Strategist at East Asia Securities, believes that regardless of the U.S. tariff ruling's outcome, its impact on Hong Kong stocks will be limited. He noted that if the ruling causes U.S. Treasury yields to surge, Hong Kong stocks might face some valuation pressure; however, it would not significantly affect the earnings or overall business of Hang Seng Index constituent stocks, nor would it heavily impact market sentiment. Chan stated that mainland China's economic data, new AI applications, models, and related policies are drawing more attention, while macro risks are more focused on geopolitical developments.

Chan expressed that even if the court rules Trump's tariff policies unconstitutional, a compromise solution is likely—such as not immediately refunding previously collected tariffs—which he believes the market would relatively easily accept. An immediate refund could have a more negative impact, as it would raise concerns about pressure on the U.S. fiscal deficit, potentially limiting further fiscal stimulus and even putting upward pressure on U.S. Treasury yields, which might cause stock market volatility. He also mentioned that it remains unclear whether the Trump administration would impose industry-specific tariffs as an alternative if it loses the case, making the market impact difficult to judge at this stage.

East Asia Securities maintains a full-year target of 30,800 points for the Hang Seng Index, with a first-quarter target range of 27,500 to 28,000 points. The firm views any pullback to 26,000 points as an attractive entry level and remains bullish on advanced manufacturing concepts and technology stocks. Chan pointed out that recent mainland economic data has been less than ideal, increasing the likelihood of policy support, which is expected to maintain a relatively accommodative or pro-growth stance, with potential further strengthening of support measures for the property market.

Additionally, he anticipates that central government support for innovation, technology industries, and emerging industries will remain strong, making this a key theme for trading on policy beneficiary concepts.