HSBC’s 2024 A-share Outlook: Valuations Bottomed Out and 5.5G to Drive Key Themes
In a recent report, HSBC has released its A-share outlook for 2024, highlighting the attractive valuations and key themes that may drive the market this year.
According to HSBC, the valuation of A-shares is already quite cheap, with historical extremes in the price-to-earnings ratio, price-to-book ratio, and discount rate relative to other emerging market indexes. The target prices for the Shanghai Composite, CSI 300, and Shenzhen Component Index are expected to increase by 14.3%, 19.5%, and 26.0% respectively by the end of 2024.
The report also points out that with low expectations for China’s economy and stock market at the beginning of 2024, A-shares are more likely to stabilize and rebound. The valuation of A-shares has become extremely attractive, particularly in the small and medium-sized ticket index, and across various industries.
HSBC is optimistic about the potential end of the slowdown in A-share corporate earnings growth, driven by policy support and the steady recovery of China’s economy. In addition, the report highlights the expected growth in corporate earnings for major consumer goods industries, as well as the potential for the localization of the artificial intelligence server supply chain and the deployment of 5.5G to become key themes in 2024.
Furthermore, industries related to state-owned enterprise reform, including the real estate market, are expected to see improvements in sentiment and potential structural changes.
It is important to note that the content, data, and tools in the report do not constitute investment advice and are for reference only. The stock market is risky, and caution should be exercised when investing.
Overall, HSBC’s outlook for A-shares in 2024 suggests that the market may have bottomed out in terms of valuations and that potential themes such as AI servers and 5.5G deployment could drive growth in the coming year. Investors should remain vigilant and consider potential risks when making investment decisions.