Standard Chartered anticipated that, if Politburo meeting in July reveals any large-scale policy stimulus, it may help expand the PE Ratio of the Hang Seng Index by about 10%, bringing the index to close to the level of 20,000-23,000.
However, if there is no large-scale stimulus announced in the meeting, the Hang Seng Index is expected to be between 18,000 and 20,000 at the end of this year, and if market expectation for policy grows, the index may jump above 20,000 mark, before meeting resistance around 21,000, it said.
As the difference between China and the US and Europe in inflation trend, the difference in monetary policy will continue in the next 6 – 12 months, and China is expected to introduce targeted monetary, fiscal and regulatory policy easing to support the post-pandemic recovery, it said.