UBS: Expects three interest rate cuts starting in July, maintains Hang Seng Index annual target at 24,500 points unchanged
UBS Vice Chairman Li Zhengguo stated at a media sharing session that the Federal Reserve is expected to start cutting interest rates in July, with three rate cuts planned for the year, which will benefit the stock and bond markets. At the same time, UBS maintains its annual target for the Hang Seng Index at 24,500 points. Li Zhengguo also mentioned that if the U.S. maintains its current tariffs, it could drag China's GDP growth rate down to 3.7-4%. In addition, with the real estate market weakening, it is expected that the government will introduce measures to reduce inventory, and the central bank may further cut interest rates by 20-30 basis points
According to the Zhitong Finance APP, Li Zhengguo, Vice Chairman of UBS Global Investment Banking and Co-Head of the Asia Corporate Client Division, delivered the latest market outlook at the UBS AIC media sharing session today, pointing out that the Federal Reserve will initiate an interest rate cut cycle in July this year, expecting a total of three rate cuts throughout the year. He stated that the shift to a loose interest rate environment will inject positive momentum into the stock and bond markets. Additionally, he maintained the annual target for the Hang Seng Index at 24,500 points.
Li Zhengguo noted that if the United States maintains the current "reciprocal tariffs" of 20% and 10% in the third and fourth quarters of this year, it could drag down China's GDP by 1-1.5 percentage points, and the annual GDP growth forecast may be adjusted to 3.7-4%. He mentioned that China's real estate market weakened again in April, and it is expected that the government will introduce more destocking measures, with the central bank possibly further cutting interest rates by 20-30 basis points within the year.
Hu Linghan, Head of China Equity Capital Markets at UBS Global Investment Banking, analyzed the listing case of Contemporary Amperex Technology Co., Limited (03750), stating that the company's listing background is related to the narrowing of the AH share price gap, reflecting the market's increased confidence in the liquidity of Hong Kong stocks. She anticipates that the listing discounts for leading enterprises will continue to narrow in the future, especially for companies with a market capitalization of over one trillion, and it is unlikely that the past high discounts of 30%-40% will occur again, but the specific discount range will still depend on individual company circumstances.
Hu Linghan believes that there are three reasons why A-share companies tend to choose Hong Kong stocks as their overseas financing location. First, the narrowing of the AH share price gap and the increased support from overseas investors for Hong Kong stocks have continuously improved liquidity; second, the financing convenience of Hong Kong stocks is high; and third, the demand for international development requires overseas currency support for cross-border mergers and acquisitions and business expansion, which Hong Kong stocks can provide a matching platform.
Regarding the tariff issue, Hu Linghan stated that tariffs have a significant impact on the consumer sector, especially on imported consumer goods, and the strong performance of this sector at the beginning of the year is related to tariff expectations. At the same time, export-intensive industries such as heavy industry may benefit from the postponement of tariffs, but the market still needs to closely monitor subsequent policy changes
