HSBC Global Research upgraded its outlook on Hong Kong stocks to “Overweight” and raised its year-end target for the Hang Seng Index (HSI) from 23,420 to 23,870.

The report highlights an improved economic outlook for China, with recent policy changes signaling the central government’s commitment to stabilizing the economy, which is positive for the A-share market. This is expected to benefit the Hong Kong market, where economic conditions are expected to improve.

Despite challenges in Hong Kong’s domestic consumption, driven by a slowdown in tourism in mainland China and changes in local spending patterns, HSBC sees supportive factors ahead. These include the start of an easing cycle by the US Federal Reserve and the Hong Kong government’s initiatives to boost tourism and support the real estate sector, which are expected to provide strong support to the market.