The report from "The Big Bank" raises the target price for BOC HONG KONG to HKD 49, expecting to benefit from Chinese companies going abroad and local wealth effects

HSBC Research published a report indicating that the market capitalization of Hong Kong stocks (approximately HKD 50 trillion in spot) and the value of the residential property market (estimated by the bank to be around HKD 10 trillion) are significantly large relative to its local GDP (forecasted to be about HKD 3.3 trillion in 2025). The earnings from the stock and property markets can also provide upward space for the bank's loan growth, deposit inflows, and fee income. The bank's sensitivity analysis shows that for every 10% increase in the value of the stock and property markets, approximately HKD 6 trillion in net wealth can be created, equivalent to 183% of local GDP and 60% of industry loans. The bank believes that BOC Hong Kong (02388.HK) is in a favorable position to capture the demand for overseas expansion from mainland Chinese enterprises, maintaining a "Buy" rating, with the target price raised from HKD 43.9 to HKD 49.

HSBC Research expects that in the long-term environment of declining interest rates in mainland China, southbound capital inflows will remain strong, and the demand from mainland investors for Hong Kong assets will also be robust. The number of new account openings should remain high, supporting the growth of asset management scale. The Hong Kong banking sector is expected to record a strong deposit growth of 11.8% in 2025. The bank has raised its compound annual growth rate forecasts for BOC Hong Kong's deposits and interest-earning assets for 2025 to 2027 by 0.6 to 1.4 percentage points, to 7.7% and 5.7%, respectively.

HSBC Research has also adjusted BOC Hong Kong's earnings forecasts for 2025 to 2027, decreasing by 0.7%, increasing by 0.1%, and increasing by 3.1%, respectively, to reflect higher loan and interest-earning asset growth forecasts, better fee income, and slightly higher net interest margin forecasts, partially offset by higher projected credit costs in the fourth quarter of 2025