Tama: Maintaining the Hang Seng Index target of 26,550 points

The Zhitong Finance App learned that Damo released a research report saying that the overall outlook for the Chinese stock market is still biased, and maintains the view that the main index target was lowered earlier in early September.

The bank believes that the current domestic demand outlook is still weak, and household deleveraging is becoming confidence-driven. Even if borrowing costs fall, residents still tend to reduce debt and increase preventative savings, resulting in insufficient consumption motivation. Moreover, the implementation of fiscal policy is also slow. General budget spending for the first eight months of this year increased by only 1.2% year-on-year, far below the 4.4% budget target for the whole year. The Dama Economic Team expects that the government will fine-tune measures such as targeted mortgage subsidies and accelerated investment in energy infrastructure, but believes that these policies are not enough to reverse the overall deleveraging cycle.

Despite this, Damo maintains a positive view of some sectors with structural opportunities. The bank maintained its benchmark forecast for June 2027, including the Hang Seng Index at 26,550 points; the State-owned Enterprises Index at 8,900 points; the MSCI China Index at 80 points; and the Shanghai and Shenzhen 300 Index with 4,880 points, meaning that the main Chinese indices only have room for moderate growth of 5% to 7% in the future. The report emphasizes that this more conservative outlook is mainly based on two major factors: the weakening of macro data and the reduction in GDP forecasts indicate that corporate profits will recover more slowly than expected; second, the liquidity environment is not as favorable as it was three to six months ago.