Morgan Stanley expects Hong Kong to continue attracting capital inflows, with a preference for HKEX, Techtronic Industries, MTR Corporation, and Henderson Land

JP Morgan published a research report stating that year-to-date, the MSCI Hong Kong Index (MXHK) has achieved a return of 26% in USD. Currently, the index's forecasted price-to-earnings ratio for the next 12 months remains 0.3 standard deviations below the 10-year average, making Hong Kong the cheapest market in the Asia-Pacific region, excluding ASEAN.

In July of this year, JP Morgan raised its basic and optimistic targets for MXHK at the end of this year to 13,000 points and 14,000 points, respectively. Assuming MXHK remains flat compared to the average price-to-earnings ratio over the past 10 years, or increases by 0.5 and 1 standard deviations, the targets for the end of 2026 will be 14,366 points, 15,522 points, and 16,679 points, representing potential increases of 8%, 16%, and 25%.

JP Morgan pointed out that Hong Kong has shown a significant recovery trend since 2023, with strong performance in the financial markets and a stabilizing residential property market. Valuations are relatively low compared to historical levels and other markets, suggesting that Hong Kong can sustainably attract capital inflows. They hold a positive outlook for next year, with preferred stocks including HKEX (00388.HK), Futu (FUTU.US), Galaxy Entertainment (00027.HK), MGM China (02282.HK), Techtronic Industries (00669.HK), China State Construction International (03311.HK), Henderson Land (00012.HK), and MTR Corporation (00066.HK), and upgraded the rating for the telecommunications services sector to "Overweight."