Value Partners: Mainland and Hong Kong stocks are expected to gradually recover next year
Value Partners released its 2025 market outlook report, expecting that stocks in mainland China and Hong Kong will gradually recover, although they are affected by uncertainties regarding U.S. interest rate cuts in the short term. A-shares may be more attractive, especially against the backdrop of earnings bottoming out. The report points out that global uncertainties still need attention, including Federal Reserve policies and the situation in the Middle East. The outlook for the Japanese stock market is optimistic, but it faces tariff threats. The South Korean stock market is challenged by automotive exports and the chip cycle, while South Asia's economic growth is strong, but the difficulty of supporting the economy through interest rate cuts is increasing
According to the Zhitong Finance APP, Value Partners has released its 2025 market outlook report, stating that due to the uncertainty of the U.S. interest rate cut pace in 2025, Hong Kong-listed stocks (especially those sensitive to interest rates) are expected to be under pressure in the short term. Although A-shares are relatively highly valued, they may be more attractive than offshore stocks. Overall, mainland and Hong Kong stocks are expected to gradually recover in 2025, mainly because earnings may have bottomed out due to a low base effect.
Value Partners noted that while market concerns about U.S. inflation and recession have eased this year, investors still need to actively respond to various global uncertainties, including the pace of Federal Reserve interest rate cuts, the results of the U.S. presidential election in November, and escalating geopolitical instability in the Middle East. Despite mixed performances across markets, Asian financial markets have still performed relatively strongly this year.
Regarding the Japanese stock market, Value Partners stated that under a strong U.S. dollar, the yen will weaken further, which could drive the Japanese stock market higher. However, potential tariff threats may offset this impact. The weak support for the Prime Minister (despite being re-elected) may lead to uncertainty in tax and economic reform policies. Nevertheless, the Bank of Japan will be more cautious regarding interest rate hikes.
In addition, Value Partners remains optimistic about the Taiwan technology-intensive market, as it is expected that the artificial intelligence chip cycle will continue to grow at least in the first half of next year.
For the South Korean stock market, Value Partners pointed out that South Korean auto exports may be affected by U.S. tariff policies, and related data may experience consolidation. Furthermore, as the chip memory cycle approaches its peak, the outlook remains challenging, and with the Federal Reserve potentially delaying interest rate cuts, it will become more difficult for the South Korean government to support the economy through rate cuts.
In terms of South Asia (ASEAN + India), Value Partners believes that countries with strong local economic growth, such as India, will be less susceptible to tariff threats. However, in the context of uncertainty regarding the pace of U.S. interest rate cuts, where U.S. rates may remain high for an extended period, Southeast Asian countries will find it increasingly difficult to rely on rate cuts to support their economies