New highs continue! International banks are bullish one after another.

With major stock indices in both A-shares and Hong Kong stocks reaching new highs this Friday, A-shares and Hong Kong stocks have been favored by funds this week (February 17-21) and have performed well. At the same time, international banks have also released reports recommending Chinese assets. On February 21, Chinese concept stocks generally rose in trading. The Direxion Daily CSI 300 China Bull 3x Shares (YINN) rose by 4.17%, iShares MSCI China ETF (MCHI) by 1.90%, NASDAQ Golden Dragon China Index (HXC) by 1.65%, and the Wind CSI China Dragon Index (DRAG) by 3.14%. A-shares and Hong Kong stocks are rising together This week, Hong Kong stocks performed stronger, with the Hang Seng Index, Hang Seng H-Share Index ETF, and Hong Kong Tech Index rising by 3.79%, 4.02%, and 6.03% respectively, according to Wind data. Both the Hang Seng Index and Hong Kong Tech Index reached a new 3-year high. Major indices in A-shares also performed well this week, reaching new highs. The ChiNext Index saw the largest increase, rising by 2.99% for the week. Tech leaders leading the market Tech stocks continued to attract funds this week, especially in Hong Kong where tech leaders became the market focus, leading to several international banks upgrading their ratings on these tech companies. On Thursday, Alibaba Group Holding Limited released its financial report for the third quarter of the 2025 fiscal year, with revenue reaching 280.15 billion yuan, an 8% year-on-year increase; net profit was 46.434 billion yuan, a 333% year-on-year increase, exceeding expectations. Goldman Sachs Group, Inc. released a report raising the target price for the stock traded in the US and Hong Kong markets from $117 and HK$114 to $160 and HK$156 respectively. The stock surged by 14.56% on Friday, reaching a 3-year high. Trading volume reached 44.5 billion Hong Kong dollars, setting a new historical high. Xiaomi Group continued to rise, with the stock price breaking through 51 Hong Kong dollars, continuously setting new highs. Goldman Sachs Group, Inc. raised the target price for Xiaomi to 58 Hong Kong dollars, expecting a 44% year-on-year growth in revenue for the fourth quarter. With active trading in Hong Kong stocks, the Hong Kong Stock Exchange stock price continued to rise, reaching more than a 4-month high, surpassing 440 billion Hong Kong dollars in total market capitalization. According to a report by Citigroup, the rating for HKEX has been raised from "Sell" to "Buy", and the target price has been raised from HK$275 to HK$370. The development of artificial intelligence has stimulated investors' enthusiasm for tech stocks, leading to a sharp increase in trading volume in the Hong Kong stock market. The average daily turnover for Hong Kong stocks since the beginning of the year has reached 194 billion Hong Kong dollars, far exceeding the market's general expectations of 145 billion Hong Kong dollars for daily turnover in 2025 and last year's 132 billion Hong Kong dollars. In addition, JPMorgan Chase reiterated its "Overweight" rating for BYD Company Limited and raised the target price from HK$475 to HK$600, expressing high expectations for BYD Company Limited and believing that it has the potential to become a presence in the global electric vehicle market just like "Toyota." Bank of China International reported that Bilibili, Inc. saw a 22% year-on-year increase in revenue in the fourth quarter of last year, meeting market expectations, and achieving a record high 36% gross profit margin, resulting in the company's first ever Quarterly GAAP profit. The target price for the stock was raised from HK$172 to HK$198, maintaining a "Buy" rating. Citigroup emphasized its optimism towards Lenovo, citing its industry-leading position, stable fundamentals, and attractive valuation, deeming any pullback as a good opportunity to enter the market. They gave a "Buy" rating with a target price raised from HK$11.5 to HK$14.3. International banks are bullish on Chinese assets Goldman Sachs Group, Inc.'s research department predicts that AI's widespread adoption in the next decade is expected to increase China's overall stock earnings by 2.5% annually. Improved growth prospects and potential confidence boost are expected to raise the fair value of Chinese stocks by 15-20%, potentially attracting over $200 billion in investment flows. They raised the target points for MSCI China / CSI 300 Index to 85 points / 4700 points, indicating a 16% / 19% upside potential in the next 12 months. Shortly after, Morgan Stanley's research report stated that due to the development of Chinese Generative AI, the recent rise in Chinese tech stocks should be more sustainable than last year's surge. They expect an average annual return of 7.8% for Chinese stocks over the next 10 to 15 years. Despite the significant rebound of Chinese stocks, Morgan Stanley still believes that Chinese stocks are attractively valued and maintained a "Overweight" rating. Subsequently, the international investment bank Morgan Stanley upgraded its rating on the China stocks to "Equal Weight." Morgan Stanley raised its target points for the offshore markets to 24,000 for the Hang Seng Index, 8,600 for the Hang Seng H-Share Index ETF, and 77 for the MSCI China index; the target price for the Shanghai and Shenzhen 300 Index at the end of 2025 was kept unchanged at 4200 points. In an email to First Financial, Morgan Stanley's Chief China Stock Analyst Wang Ying stated that the Chinese stock market, especially the offshore market, is undergoing a structural transformation which has led to a sustainable recovery in ROE and valuation. This makes us more confident now than during the rebound in September last year that the recent improvement in the performance of MSCI China is sustainable, thus we have shifted from skepticism to cautious optimism. This article was reprinted from "WindInfo". Editor: Jiang Yuanhua.