Series of factors will conspire to limit Hong Kong stock gains in 2025: UBS
The Swiss bank expects the city’s benchmark index to rise above 20,000 by year-end, implying a gain of 3.7 per cent from Wednesday’s close
Hong Kong stocks are likely to post modest gains this year, as the benchmark index’s gains will be limited by rising US-China tensions, a slower pace of rate cuts and uncertainty around Beijing’s economic stimulus measures, according to UBS.
The Swiss bank expects the Hang Seng Index to post a single-digit percentage increase, only just crossing the 20,000-point threshold by the end of the year. This represents a 3.7 per cent rise from Wednesday’s close of 19,279.84.
While China’s policy measures may stabilise markets in the short term, the broader geopolitical and economic landscape remains uncertain, UBS analysts said in a media briefing on Wednesday.
“The forecast reflects our concerns over the unpredictable pace of interest rate cuts and ongoing geopolitical tensions, especially with the US, along with questions about the effectiveness of China’s supportive measures,” said Angus Chan, a strategist at UBS.
As a result, the bank has raised the risk premium for the Hang Seng Index to 8 per cent from 6 per cent, reflecting the relatively high volatility anticipated in the market this year, he added.
