UBS: Hang Seng Index expected to reach 30,000 by year-end, Hong Kong property prices expected to increase by one percent.

UBS Global Research APAC Director Peikon Lian expressed at a press conference that the bank maintains its year-end target for the Hang Seng Index at 30,000 points. It is expected that the meeting between the US and China leaders this week will discuss topics such as the Middle East, trade, and technology cooperation. If there are discussions regarding cooperation between companies of both sides or relaxation of restrictions, it will have a positive impact on the stock market. The bank also predicts a rate cut by the Federal Reserve in the fourth quarter of this year. Peikon Lian further pointed out that although the valuation of the AI sector is high, factors such as semiconductor capital expenditures and no decline in orders suggest the continued trend in AI and related industries. However, he mentioned that the market is currently neglecting the second-order effects of high oil prices, which have not been reflected in downstream industries, macroeconomic data, or inflation. Therefore, cautious attitudes are being adopted towards industries sensitive to fertilizer prices, aviation and transportation, as well as interest rates such as real estate, finance, banks, securities, and insurance, with expectations of greater price fluctuations in related sectors in the near future. UBS APAC Real Estate Research Head Zhenhong Lin stated that he expects Hong Kong property prices to rise by 5% to 10% this year, with preferences for residential, office, and retail sectors, in that order. He is optimistic about the support for the Hong Kong property market from around 25,000 people who have immigrated to the UK in the past few years and are now returning to Hong Kong after obtaining citizenship, with an estimated 10%, or about 26,000 people, currently residing in Hong Kong and additional support from domestic professionals. Regarding office space, he predicts a rental increase of 3% to 5% in Central, outperforming the market average. As for the retail sector, the rising oil prices are causing costs to rise quickly in Hong Kong, leading to an increase in cross-border consumption by Hong Kong residents and an intensified market presence of mainland e-commerce companies. Zhenhong Lin continued to suggest that when selecting property stocks, it is important to look at whether the company's balance sheet can support dividends, with a preference for residential sectors due to positive cash flows and the removal of inventory, while for office companies, one should consider the region. It is also important to consider the views of the parent company on the real estate market, to see if they have an interest in capital return for their listed subsidiaries.