HSBC is bullish on Hong Kong stocks. The Hang Seng China Enterprises Index is expected to rise by 21% this year.

HSBC strategists are optimistic about Chinese companies listed in Hong Kong, stating that these stocks benefit from "favorable policy rhetoric" in mainland China and improving economic prospects. HSBC Bank strategists Herald van der Linde and Prerna Garg stated in their report that the Hang Seng China Enterprises Index could rise by 21% by 2025. They raised their year-end target for the index from 8610 points to 8800 points. The strategists also upgraded their rating on the Hong Kong stock market from "neutral" to "overweight," while downgrading their rating on the Indian stock market from "overweight" to "neutral" and upgrading their rating on the South Korean stock market from "underweight" to "neutral." HSBC strategists stated that rate cuts, along with measures to promote the tourism industry and revive the real estate sector, will support the Hong Kong stock market. Investors are currently focusing on the National People's Congress meeting in March to understand China's growth targets for 2025 and detailed plans to stimulate consumption. Last January, HSBC predicted a 24% increase in the Hang Seng China Enterprises Index by 2024. The index rose by 26% that year. The strategists stated, "Recent policy measures indicate that the risk of sharp decline in corporate profit growth has been avoided. Given households have over $20 trillion in cash savings, this is crucial for alleviating tail risks and restoring market confidence." Meanwhile, HSBC also downgraded its rating on the Indian stock market from "overweight" to "neutral," citing slowing domestic economic growth and overvaluation as potential constraints on returns this year. In recent months, the rise in the Indian Nifty 50 index has lost momentum due to weak corporate earnings and foreign outflows. The Indian government this week lowered its economic growth forecast for the fiscal year to the lowest level since the pandemic. HSBC upgraded its rating on the South Korean stock market from "underweight" to "neutral," as recent sell-offs provide a "good opportunity" to increase exposure. HSBC strategists stated that political changes in South Korea should have minimal impact on corporate earnings.