Resilient labour market conditions will also help drive the economy up.
Hong Kong’s economy is expected to grow by 3.3% for the full year of 2024, according to experts from the Bank of East Asia.
Speaking at a media briefing, BEA chief economist Ricky Choi and chief investment strategist Frank Lee noted the city’s improving merchandise trade and tourism.
“With improving merchandise exports, stabilising asset markets, resilient labour market conditions, and a sustained recovery of inbound tourism, Hong Kong’s economy will continue its steady growth momentum,” said Choi.
In Q1, Hong Kong’s economy grew 2.7% year-on-year, powered by improving merchandise trade and inbound tourism.
For 2024, the unemployment rate is expected to stay at around 3%.
Overall, inflationary pressure remains modest, as the composite consumer price index is estimated to be around 2.2% in 2024, according to BEA.
Notably, residential property prices are expected to stay “largely stable” in 2024.
BEA analysts expect that residential property prices will begin to recover in tandem with the easing of the external monetary environment.
Lee, in particular, noted that new investment policies in China could raise listed companies’ earnings.
“The implementation and enhancement of policy measures by the Chinese Mainland authorities for stabilising growth could result in upgrades of earnings forecasts for listed companies, providing support for Hong Kong stocks,” Lee said.
The US elections could also be advantageous for investment performance.
“In terms of global markets, historical track records show that the run
up to the US presidential election would support the performance of mature markets, especially US stocks and US bonds,” Lee noted.
“We expect US stocks to perform well in the second half of 2024, and the target price for S&P 500 to hit 5,886,” the BEA analysts said.
In contrast, European and Japanese stock markets are subject to rising exchange rate risks and will most probably move sideways in the second half of the year.
BEA highlighted four investment themes:
State-owned enterprises stocks with high dividend yields (e.g. Mainland telecommunications, banking, insurance, and power stocks)
Stocks benefiting from the US interest rate cuts (e.g. Hong Kong utilities and telecommunications, Macau gambling)
Technology stocks with brighter earnings recovery prospects.
Stocks benefiting from the Chinese government’s policies (e.g. new energy, industrial equipment, etc.).
