<div id="readability-page-1"><div>Citi published a research report stating that it remains cautiously optimistic on the outlook for the China equity market in 2H26, favoring the Tech and export sectors, and upgraded the investment rating of the insurance sector from &#34;Neutral&#34; to &#34;Overweight&#34;. The bank expects insurers to benefit from higher investment income from equities and inflows from bank deposits into insurance products. Citi set its end-2026 targets for the HSI, CSI 300 Index and MSCI China Index at 29,600 points (down 1.3% from the previous 30,000), 5,600 points and 92.0, respectively, and introduced a 1H27 target of 30,500 points for the HSI. Citi said that given the heavier weighting in technology stocks and more ample liquidity in the A-share market, it prefers A-shares to H-shares in 2H26.In terms of sector allocation, Citi maintained &#34;Overweight&#34; on the Tech, basic materials, healthcare and internet sectors, but lowered the weighting of the internet sector by 5.3 ppts to 36.5% due to slowing earnings growth. The bank also raised the weighting of the financial sector by 1.6 ppts to 12.1%, citing strong IPO pipelines and robust market turnover in Hong Kong. Citi noted that its 2026 EPS growth forecast for the HSI has accelerated to 9.9% YoY, mainly driven by the energy and raw materials sectors, while forecasts for the Tech, internet and automobile sectors were revised down. XIAOMI-W (01810.HK) -0.080 (-0.252%) Short selling $838.04M; Ratio 16.151% , BABA-W (09988.HK) +5.100 (+3.840%) Short selling $2.09B; Ratio 8.965% and MEITUAN-W (03690.HK) -1.900 (-2.169%) Short selling $1.51B; Ratio 32.181% were identified as the main contributors to earnings downgrades.At the stock level, Citi updated its top Buy list for H-shares, retaining TENCENT (00700.HK) -2.400 (-0.519%) Short selling $3.20B; Ratio 17.434% (TP HKD783), AIA (01299.HK) +0.750 (+0.863%) Short selling $656.57M; Ratio 27.826% (TP HKD103), HENGRUI PHARMA (01276.HK) -2.450 (-3.558%) Short selling $61.84M; Ratio 22.448% (TP HKD134) and Trip.com Group Limited (TCOM.US) (US TP USD82). It added MMG (01208.HK) -0.270 (-2.542%) Short selling $28.78M; Ratio 7.534% (TP HKD11.2), CICC (03908.HK) -0.380 (-1.772%) Short selling $11.62M; Ratio 5.013% (TP HKD27.66), MONTAGE TECH (06809.HK) -18.600 (-3.713%) (TP HKD305) and ASMPT (00522.HK) -10.000 (-5.485%) Short selling $41.33M; Ratio 6.981% (TP HKD180), replacing certain hardware names and Zijin Mining. The bank is positive on CICC benefiting from the wave of dual listings by A-share companies and expects new opportunities in thermo-compression bonding and photonics to become key growth drivers for ASMPT after 2027.In addition, Citi analyzed the potential impact of easing Middle East conflicts on Hong Kong-listed stocks. Downstream consumption, industrial and utilities names such as SHENZHOU INTL (02313.HK) +1.260 (+2.719%) Short selling $48.53M; Ratio 15.256% , YUE YUEN IND (00551.HK) +0.030 (+0.202%) Short selling $40.85M; Ratio 42.726% , HENGAN INT'L (01044.HK) -0.280 (-1.047%) Short selling $19.73M; Ratio 27.861% , POP MART (09992.HK) -4.400 (-2.735%) Short selling $1.40B; Ratio 31.543% , SAMSONITE (01910.HK) +0.340 (+2.484%) Short selling $13.43M; Ratio 8.215% , CTF SERVICES (00659.HK) +0.080 (+0.950%) Short selling $314.83K; Ratio 2.061% and ENN ENERGY (02688.HK) +0.350 (+0.585%) Short selling $11.01M; Ratio 7.929% may benefit from lower energy and logistics costs.By contrast, auto stocks including BYD COMPANY (01211.HK) 0.000 (0.000%) Short selling $413.81M; Ratio 20.201% , GEELY AUTO (00175.HK) -0.120 (-0.561%) Short selling $218.14M; Ratio 16.867% and GWMOTOR (02333.HK) -0.270 (-2.306%) Short selling $17.89M; Ratio 10.525% may face pressure as falling oil prices could weaken demand for new energy vehicles.Citi's H-share &#34;Sell&#34; list includes HUANENG POWER (00902.HK) -0.280 (-4.064%) Short selling $98.11M; Ratio 22.407% (TP HKD4.6), CHINA RES POWER (00836.HK) -0.260 (-1.260%) Short selling $26.46M; Ratio 9.194% (TP HKD17.5), HUISHANG BANK (03698.HK) 0.000 (0.000%) Short selling $1.36M; Ratio 1.793% (TP HKD4), BYD ELECTRONIC (00285.HK) +0.140 (+0.489%) Short selling $61.85M; Ratio 20.905% (TP HKD22.6), SJM HOLDINGS (00880.HK) 0.000 (0.000%) Short selling $4.77M; Ratio 35.623% (TP HKD1.8), CHERVON (02285.HK) +0.400 (+2.255%) Short selling $6.41M; Ratio 16.174% (TP HKD17.5) and CR MEDICAL (01515.HK) +0.010 (+0.362%) Short selling $289.01K; Ratio 4.548% (TP HKD2.6). (ad/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-05-14 16:25.) (Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)</div></div>

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Citi has revised its end-2026 target for the Hang Seng Index (HSI) to 29,600, down from 30,000, while maintaining an optimistic outlook for the China equity market, particularly in the tech and export sectors. The bank upgraded the insurance sector to "Overweight" and expects strong growth in EPS for the HSI. Key stock picks include Tencent and AIA, while it has identified several stocks for its "Sell" list. Citi also analyzed the potential impacts of easing Middle East conflicts on Hong Kong-listed stocks, highlighting beneficiaries and those under pressure.

Citi Cuts HSI 2026 TP to 29,600; TENCENT , AIA Among Top H Shrs Picks