The Hang Seng Index could reach 20,000 points late next year - about 60 per cent higher than present levels - if the market overshoots on a series of positive factors, according to CLSA Global Emerging Markets.
Analyst Dio Wong said in a report that 20,000 was not a fundamental call, but was possible based on a combination of falling interest rates late next year, a growing economy and positive expectations for the property market.
'Throw in fledgling signs of [mainland] growth engineered from a mild [yuan] devaluation and the chance for overshoot is even higher,' Mr Wong said.
CLSA's fair value for October next year is 16,300 points, based on a target three-month interbank offered rate at 5.9 per cent and with HSBC Holdings' share price at $118.
The best performing sectors are expected to be property and telecommunications; both to rise 35 per cent.
The worst would be power, up 15 per cent, the report said.