Goldman Sachs (Asia) has revised upwards its targets for the Hang Seng Index but the company is still cautious about the stock market's prospects.
The United States investment bank said it had raised its market forecast for the next three to six months to between 7,500 and 10,000 points from between 6,500 and 8,500 points.
Executive director Mike Warren said interest rate reductions in the US lowered the chances of a recession in the world's largest economy.
He said the lower US rates set the stage for a similar cut in Hong Kong rates.
The revision is the latest in a series of target amendments as market valuations were rocked by recession and government intervention in the markets in August.
'Recent global macro developments should help alleviate pressure on the currency peg in Hong Kong,' Mr Warren said.
'That said, the Hang Seng Index is up-to-speed with these developments, and we believe that upside for the market is capped beyond the upper end of our revised three to six-month trading range.' The index finished yesterday at 9,778.91 points, off a high of 9,860.61.
