Sun Hung Kai Research has upgraded its forecast for the Hang Seng Index, saying it will reach 14,000 this year on a capital inflow from the US and stable economic recovery.
The research house released a forecast two months ago estimating the index would climb 24 per cent to 13,000 this year.
'The market has already increased by 12 per cent in three months, which is half the target we set last time. We are optimistic that it will have sustainable growth this year,' head of research Joseph Tang said.
The Hang Seng Index closed at 11,832.77 yesterday.
Mr Tang said there was a capital outflow from the US market as corporate profits were no longer attractive. While there was a capital flow to Asia and Europe, Hong Kong, though categorised as an underweight market, could also share the benefit.
As the Hong Kong dollar is pegged to the US dollar, there should not be any difference in interest rates, Mr Tang said, but rates in Hong Kong had been lower than those in the US since last year.
