HSBC Analysts Predict 7-10% Upside for China Stocks by 2024

According to HSBC analysts, China stocks still have the potential for a 7-10% upside by the end of 2024, driven by new policy tools and fiscal support from the People’s Bank of China (PBoC).

The PBoC’s recent measures, including setting up swap facilities for securities brokers, mutual funds, and insurance companies, aim to boost liquidity in the market.

“These new policy tools could support a market rebound towards the end of the year,” HSBC stated.

Additionally, the central bank’s special relending program is expected to enable commercial banks to provide loans for share buybacks, potentially lifting stock prices further.

HSBC analysts noted that China’s recent Politburo meeting emphasized the importance of supporting growth through countercyclical fiscal and monetary policies.

These policies are aimed at stabilizing the housing market, boosting the capital market, and promoting private sector growth. HSBC views this as a “decisive turn in policy direction,” indicating stronger government support for the stock market.

Although HSBC reduced its end-2024 target for the Shenzhen Composite (SZCOMP) by 7% to 9,800, the targets for the Shanghai Composite (SHCOMP) and CSI 300 remain unchanged, suggesting a potential upside of 7-10%.

Despite the sluggish economy, HSBC is optimistic about China’s equity market, particularly with expected Federal Reserve rate cuts.

The analysts predict that if the Fed enters a cut cycle, without a US recession, China equities could rise by up to 25%, with growth stocks outperforming value stocks.

HSBC also highlighted ten stocks across five investment themes, including Roborock, Mindray, BYD (SZ:002594), and Xiaomi (OTC:XIACF), which are well-positioned to benefit from China’s growth policies and global expansion.