Citi lifts Hang Seng Index target as earnings outlook improves and Beijing support builds

Citi’s call reflects a mix of improving profit forecasts and anticipated catalysts from China’s forthcoming five-year economic plan. The firm raised its 2026 earnings-per-share growth forecast for Hang Seng constituents to 9.8 per cent from 8.1 per cent, versus a modest 0.9 per cent gain expected in 2025, arguing that sectors such as healthcare, insurance and advanced manufacturing should benefit most from policy priorities. With the index closing at 25,938.13 on the day of the report, the new year-end target implies about 3.3 per cent upside in the near term, with a more substantial climb mapped out over the next 12–15 months.

Strategists emphasized relative value in H-shares, noting they tend to respond more directly to global liquidity shifts than yuan-denominated A-shares. They also underscored that both onshore and offshore Chinese benchmarks still screen as inexpensive by historical standards, leaving room for multiple expansion if earnings stabilize and rate-cut expectations firm up. The macro backdrop is mixed: headline growth has met targets while consumer prices and property indicators lag, but Citi believes targeted measures and steady southbound flows can support Hong Kong valuations.

The upgrade arrives alongside similar optimism from other houses, including a recent increase to 27,010 from 25,830 by HSBC, helped by steadier IPO calendars and household cash buffers. For investors, the near-term focus is whether policy follow-through and earnings beats can convert discounted valuations into durable performance. If results and guidance trend better through the fourth quarter, Hong Kong’s market could extend its recovery into 2026, with cyclicals and policy-aligned growth names leading.