CLSA: Increasing the weight of Hong Kong stocks to over 20% over preferred WH Group (00288) and others.

Citic Securities released a research report stating that it will increase the weight of the Hong Kong market to an overweight position of 20%. The main considerations are the reduced correlation between the Hong Kong and Chinese markets, allowing for differentiated allocation. The Hong Kong IPO market is expected to outperform that of 2025, with total IPO and rights issue fundraising reaching $82.3 billion last year. For the first time since 2021, the Hong Kong property market has recorded a year-on-year increase, and the property market recovery will drive the stock market. In addition, profit forecasts for Hong Kong companies have turned positive since July 2025, second only to Japan, South Korea, and Taiwan in the Asia-Pacific region. The valuation of the Hong Kong stock market is relatively attractive compared to its peers in the region, with a P/E ratio of 16.7 times, slightly lower than the 35-year average of 17.2 times. Apart from the Chinese and ASEAN markets, the Hong Kong market is the furthest from its historical highs and has the potential for catch-up growth. The brokerage firm mentioned top recommendations including WH Group (00288), AIA (01299), Hong Kong Exchanges and Clearing Limited (00388), New World Development Company Limited (00016), CK Hutchison Holdings Limited (00001), Techtronic Industries Co. Ltd (00669), and Galaxy Entertainment Group Limited (00027), all of which have been given a "outperform the market" rating. Among them, WH Group is the stock that the firm has "high confidence" in.