BOCI has released a research report indicating an optimistic outlook for the Hong Kong stock market in 2H25 as it believes that China's policymakers have a reserve of incremental policy tools to effectively address China's tensions with the US. They are expected to ramp up the implementation of incremental policies in 2H to fully unleash policy effects.

In the broker's opinion, efforts will focus on strengthening the domestic circulation, advancing supply-side reforms, combating involutionary competition, expanding domestic consumption demand comprehensively, vigorously promoting technological innovation and industrial upgrading, continuously consolidating the stable trend of the real estate market, as well as stabilizing and activating the capital market.

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To BOCI, the current valuation level of the Hong Kong stock market remains attractive. The broker predicted that the HSI could reach 27,500 by the end of this year, based on a 12.2 times 2025 forecasted P/E ratio, about a 5% premium over the historical average P/E ratio of the past 20 years.

In terms of key investment opportunities, the broker suggests investors pay attention to supply-side reforms, actions against involutionary competition, and the infrastructure industry chain. In the medium to long term, it recommended focusing on leading consumer companies driven by domestic demand, stocks with low valuation but high dividends, and self-owned brands accelerating the process of domestic substitution.