[ET Net News Agency, 23 October 2018] HSBC Global Research introduced its end-2019
index targets for Chinese equities by rolling over the latest estimates for profit growth,
dividend pay-outs, and cost of equity to next year.
The research house updated the constituents of different indices: MSCI China at 90;
HSCEI at 12,000; HSCCI at 4,600; and Hang Seng Index at 30,000 (previous end-2018 targets:
MSCI 100; HCCEI 13,000; HSCCI 4,600; Hang Seng Index 31,000).
HSBC doesn't see immediate catalysts as long as there is no clear sign of US rates
peaking. It expects a US hike in December 2018, two more in 2019, and then an extended
pause before rate cuts in 2020, a slower pace than consensus.
For sector allocation, HSBC maintained "overweight" on financials, and upgraded energy
and consumer staples to "overweight". It raised consumer discretionary to "neutral" and
suggested a "neutral" allocation to the new communication services sector.
It moved IT hardware and software to underweight on trade tensions.
HSBC is "overweight" China. It highlighted nine bottom-up ideas for 4Q: Alibaba, China
Construction Bank (00939), Ping An Insurance (02318), China Resources Land (01109), CSPC
Pharmaceutical (01093), Kunlun Energy (00135), Anhui Conch Cement (00914), Haier
Electronics (01169), and Everbright International (00257).
In these uncertain times, HSBC suggested that investors focus on stocks with solid
growth prospects, high yields, and reasonable valuations. (KL)