Standard Chartered maintains the Hang Seng Index target range for next year, with prices expected to break new highs again

Standard Chartered maintains an "overweight" rating on Chinese stocks, with a 12-month forecast range for the Hang Seng Index remaining at 28,000 to 30,000 points. Zheng Zifeng, Chief Investment Officer for North Asia at Standard Chartered, indicated that in the first year of the 14th Five-Year Plan in 2026, the Chinese government is expected to introduce more targeted stimulus measures to boost the economy. However, if investment sentiment deteriorates, geopolitical tensions escalate, expectations for interest rate cuts by the Federal Reserve decline, and policy support is insufficient, the Hang Seng Index range may shift down to 26,000 to 28,000 points.

In terms of sectors, the bank upgraded healthcare to "overweight," maintained "overweight" on communications and technology, while downgraded consumer discretionary to "core." He noted that a significant rebound in corporate profits in mainland China due to anti-involution measures is not expected until the second half of next year, hence a more cautious allocation to that sector. The healthcare sector, on the other hand, benefits from improved Sino-U.S. relations and structural factors related to an aging population.

The bank stated that the Federal Reserve may further cut interest rates in the coming year, with a favorable macroeconomic outlook benefiting risk assets. However, it still recommends an overweight position in gold and global equities, while also emphasizing the need to diversify regional allocations. It has downgraded Europe (excluding the UK) and Japan to "underweight," while raising India to "overweight." It also maintains an "overweight" position in U.S. stocks but cautions against ignoring valuation risks.

Regarding interest rates, so far, tariffs have had a limited impact on commodity inflation. As employment weakens, the Federal Reserve may cut rates by another 75 basis points before the end of 2026.

Chen Zhengluo, Head of Investment Strategy for Wealth Management at Standard Chartered Hong Kong, stated that gold prices have performed more strongly than stocks and bonds this year, as central banks and investors continue to seek alternatives to the U.S. dollar. There is still room for growth in reserve diversification demand, and gold prices may have the opportunity to reach new highs in the coming year, with spot gold potentially challenging $4,800 next year. The recommendation to maintain an "overweight" position in gold remains