Citigroup: Lowers Hang Seng Index year-end target to 22000 points, adding Xiaomi-W(01810) and AIA(01299) to its preferred list.

Citibank releases a research report stating that the year-end target for the Hang Seng Index has been lowered to 22000 points, down from the original prediction of 28000 points, to reflect a slowdown in earnings per share growth. In addition, the bank has lowered its mid-year target for the Hang Seng Index to 21000 points, down from the original forecast of 26000 points. The H-share preferred list has added Xiaomi and AIA. The report indicates that the earnings per share growth forecast for the Hang Seng Index this year has been lowered to 5.1%, compared to 9.4% in January last year and 6.8% in August last year. The MSCI China earnings growth forecast has also been lowered to 9%, down from 14.2% a year ago. Hong Kong stocks are currently trading at a discount, with the Hang Seng Index trading at a forward P/E ratio of 8.8x and a P/B ratio of 1x, lower than historical averages by 1 to 2 standard deviations. In terms of the service industry, the bank is bullish on consumer goods (home appliances and electronics), automotive, tourism, transportation, and elderly-related services; in terms of investments, they are bullish on new technologies and green infrastructure, such as grid equipment. Citibank stated that the H-share preferred list has added Xiaomi-W (01810) and AIA (01299), while retaining Tencent (00700), ASMPT (00522), TRIP.COM-S (09961), BYD COMPANY (01211), and HAIER SMARTHOME (06690). The A-share preferred list has added China Merchants Bank (600036.SH) and Ping An Insurance (601318.SH). Five major catalysts The report states that China is seeking stable economic growth, and its effectiveness will depend on factors such as the impact of domestic stimulus measures. In addition, the meetings held in March this year may bring about five major catalysts for China, including promoting domestic consumption, curbing excess capacity, accelerating the development of new products, promoting structural reform of state-owned enterprises, and relaxing policies to promote the tourism industry. The report also highlights optimism for the domestic market, the service industry, and the A-share market. The bank recommends a "barbell strategy," increasing holdings in sectors such as technology, transportation, and the internet, through profit growth, policy support, and internal cost cutting, to bring potential upside; while also bullish on high-yield A-share stocks under loose monetary conditions.