Broker Name: DBS Bank (Hong Kong) Limited
Date of Report: 26 November 2025
Excerpt from DBS Bank (Hong Kong) Limited report.
Report Summary
- DBS expects the Hong Kong bull market to extend into 2026 with a 12-month Hang Seng Index (HSI) target of 30,000, implying 16% upside, driven by 11.7% forecast EPS growth and moderate valuation expansion.
- Key investment themes include continued strength in technology (especially AI), anti-involution beneficiaries (like batteries and materials), and financials, with a constructive outlook on both H-shares and A-shares for distinct opportunities.
- Main risks include a potential early end to the US-China trade truce, tighter global liquidity, and deeper deflation in China, while upside catalysts include stronger-than-expected policy support and further technological breakthroughs.
- Sector preferences favor China insurers, materials (aluminium and batteries), internet/AI, power, and tech hardware, while maintaining a neutral view on banks, developers, and some consumer categories, and a negative view on aviation, property, and oil & gas.
- Top stock picks highlighted are Alibaba, BYD Electronic, CATL, China Construction Bank, China Mobile, HKEx, Ping An, Tencent, Trip.com, and Xiaomi, with a focus on companies benefiting from AI, stable yields, and sector-specific policy support.
- Strong Southbound (mainland China) inflows and moderate foreign inflows are expected to continue, supported by ample liquidity and a low-yield environment in China, along with a robust IPO pipeline and improving capital market conditions in Hong Kong.
- DBS sees modest valuation expansion potential for Hong Kong equities, with HSI valuations expected to narrow their discount relative to global peers as policy and liquidity headwinds recede.
- The macroeconomic outlook calls for quality-driven growth in China, continued policy support (especially in technology and infrastructure), and manageable geopolitical tensions, with urban renewal and anti-involution policies as key policy themes for 2026.
- Sector-specific strategies emphasize accumulation on pullbacks (e.g., CATL), overweighting financials for yield and stability, and favoring select consumer and industrial companies poised to benefit from structural trends and policy support.
Above is an excerpt from a report by DBS Bank (Hong Kong) Limited. Clients of DBS Bank (Hong Kong) Limited can be the first to access the full report from the DBS website: https://www.dbs.com.hk/
