Citigroup anticipated that the major indices will likely extend the range-bound momentum in H1 of 2023 throughout the the rest of the year, due to the enervated Chinese economy, strengthening USD/ RMB and increasing friction in China-US relations.
The broker cut the end-2023 target for the Hang Seng Index to 22,000 from 24,000, and set the target by the end of H1 2024 at 23,000, taking into account that the EPS growth for enterprises may shrink from 21.1% in 2023 to 9.8% in 2024, according to a note.
Citigroup expects CSI 300 Index to reach 4,550 by the end of 2023 and to 4,800 by the end of H1 2024. The year-end target for the MSCI China Index is 72 and the target for the end of H1 2024 is 75.
Given the extensive policy support, the broker preferred A-shares over H-shares and recommended Overweight on sectors including consumption, internet, transportation and technology. Citigroup favored NetEase, Chow Tai Fook, Sands China, BYD Company, Shenzhou International, AIA, China Resources Gas among Hong Kong-listed stocks.