BNP Paribas says the worst may be over for Hong Kong-listed stocks, as overseas investors chase returns in emerging-market equities.
'The situation was different six months ago, when risk was a dirty word in asset markets, but the situation has changed,' Clive McDonnell, the head of Asian equity strategy research at BNP Paribas, said yesterday. '[Now] we are talking about the next phase, actually moving into a recovery phase, so we are leaving the bear market behind us.'
Mr McDonnell said Hong Kong and other select regional markets likely hit bottom in October last year, and he set 12-month targets of 16,000 points for the Hang Seng Index and 9,400 points for the H-share index.
The Hang Seng Index might reach that mark by the first half, he added.
The HSI and the H-share index yielded to profit taking yesterday, falling to 13,622.11 points and 7,966.99 points respectively.
Key to a sustainable rebound would be further deterioration in US dollar exchange rates, Mr McDonnell said. A strong dollar discourages fund flows into emerging-market assets such as stocks, commodities and properties because of the unfavourable currency spreads.