Standard Chartered North Asia CIO Zheng Zifeng: China's assets demonstrate resilience; optimistic about Hang Seng Tech and gold

Southern Finance, 21st Century Business Herald Reporter Yuan Sijie, Intern Zhang Boyang, Hong Kong Report

In early April, international oil prices hovered above $100 per barrel, with Middle East tensions continuously affecting global markets.

Standard Chartered Bank’s latest “Global Market Outlook April 2026” (hereinafter referred to as “Outlook”) estimates that if the conflict lasts only 3-4 weeks, the probability of oil prices peaking is 70%; but if high oil prices persist for several months, global inflation will be hit even harder.

Against this backdrop, the bank maintains an overweight rating on Asian (excluding Japan) and Chinese stocks. Zheng Zifeng, Chief Investment Officer of Standard Chartered Bank North Asia, told 21st Century Business Herald in a recent interview that since March, major global currencies have generally depreciated about 2% against the US dollar, while the RMB exchange rate remains stable; the performance of A-shares and Hong Kong stocks has also outperformed other regional markets. “From both fundamentals and capital flows, Chinese assets currently have a solid support base.”

Signals of China’s economic recovery are also strengthening. Data from the National Bureau of Statistics show that in March, manufacturing PMI rose to 50.4%, returning to expansion territory; from January to February, industrial added value above designated size, retail sales of consumer goods, and fixed asset investment increased year-on-year by 6.3%, 2.8%, and 1.8%, respectively.

Zheng Zifeng summarized this round of “reassessment of Chinese assets” as driven by “fundamentals + valuation + capital flows”: Hong Kong stocks benefit from low valuations and international capital inflows, while A-shares are riding the wave of listing bonuses in emerging industries like GPU chips and robotics.

Research reports from Industrial Securities indicate that since the beginning of this year, the proportion of Middle Eastern sovereign funds participating in cornerstone subscriptions for Hong Kong IPOs has increased from less than 20% at the start of 2024 to around 38-39% in early 2026.

According to Hong Kong Stock Exchange data, since March this year, international intermediaries have ended their previous unilateral capital outflow trend, gradually beginning to flow back slightly and turning to two-way trading: from March 2 to March 18, net inflows totaled HKD 210 million.

Despite recent divergence in performance between small-cap and large-cap tech stocks in Hong Kong stocks, Zheng Zifeng remains optimistic about the medium- to long-term development of the Hang Seng Tech Index. He pointed out that valuations of large platform companies in Hong Kong stocks have fallen back to 15-16 times P/E, “companies are willing to increase capital expenditure, reflecting optimistic expectations for China’s economy in the next one to two years.” It is expected that in the next six months to a year, newly listed AI and chip companies may be included in the Hang Seng Index, further promoting diversification.

Regarding specific allocation strategies in Hong Kong stocks, Zheng Zifeng suggests clients allocate more than 60% of their positions to high-quality high-dividend stocks. For example, he favors non-financial state-owned enterprise H-shares, which have dividend yields far higher than their A-share counterparts; the remaining 40% can be allocated to undervalued growth stocks.

In response to recent market discussions about whether the “golden bull market” has ended, Zheng Zifeng said that the recent case of the Central Bank of Turkey selling $8 billion worth of gold through swaps is an exception—its foreign exchange reserves contain over 40% gold, far above the less than 10% average in other emerging markets. “In contrast, central banks in developed markets generally allocate 25% to 50% in gold.”

Emerging market central banks still have significant room to increase holdings; de-dollarization remains structurally driven and has not reversed. Notably, Standard Chartered has raised its 12-month gold price target to $5,750 per ounce and maintains a 7% allocation in its baseline portfolio.

Zheng Zifeng believes that technically, the 200-day moving average is around $4,100–$4,200, and “current levels of $4,200–$4,300 are actually good entry points.”

Chinese Assets Demonstrate Resilience

“21st Century”: Amid current oil price volatility and tense Middle East tensions, Standard Chartered still maintains an overweight view on Asian (excluding Japan) stocks and China, with a core reason being what?

Zheng Zifeng: Based on high-frequency macro data from January and February, retail, fixed asset investment, and industrial added value have already shown signs of growth. Meanwhile, the recently released March PMI data was quite impressive. With economic data stabilizing and rebounding, asset valuations have also fallen to relatively low levels. From both fundamental and valuation perspectives, we believe the current market is attractive.

Additionally, since March, the escalation of Middle East conflicts has shown resilience in Chinese assets during the subsequent weeks of market volatility, as reflected in the performance of Chinese stocks and exchange rates. In terms of exchange rates, since March, major global currencies have generally depreciated about 2% against the dollar, while the RMB exchange rate remained stable without significant depreciation. In the stock market, both onshore A-shares and offshore Hong Kong stocks outperformed other regional markets. In summary, from both fundamentals and capital flows, the market currently has solid support.

“21st Century”: What are the main attractions of A-shares and Hong Kong stocks?

Zheng Zifeng: I think this attractiveness can be analyzed from two aspects. First, the P/E ratio of Hong Kong stocks is at least about double that of A-shares. Second, the Hong Kong capital market is more closely linked to international capital. The uncertainty in Middle East tensions is attracting more Middle Eastern funds to flow back into Asian markets, with Hong Kong being a key destination.

Looking at the onshore A-share market, we can see it has already shown some breakthrough development momentum. Currently, many emerging industries are emerging in China. Whether it’s GPU chips or robotics, many new unicorn companies prefer to list first in A-shares. Therefore, we believe that if one wants to directly participate in the growth wave of China’s emerging industries over the next 5 to 10 years, investing in A-shares remains the core way to capture this growth.

Hang Seng Tech to Stop Falling and Rebound

“21st Century”: The latest research report from Standard Chartered highlights the Hang Seng Tech Index as one of the opportunity-driven investment views. Given the recent divergence in Hong Kong tech stocks, how do you view the investment strategy for the Hong Kong tech sector?

Zheng Zifeng: The divergence in the tech sector largely reflects in the composition of the Hang Seng Tech Index. A significant proportion of large-cap weights are concentrated in traditional sectors, with over 40% in non-essential consumer sectors, mainly e-commerce and electric vehicles.

The market generally believes that over the past year, factors such as intensified industry competition and continued capital support have led to underperformance of the tech index. However, if we look at newly listed companies, especially in AI, GPU chips, and other emerging fields, their post-listing performance has been quite impressive. These companies are directly benefiting from increased AI capital expenditure. Unfortunately, their representation in the current index remains low.

From a medium- to long-term perspective, we remain optimistic about the Hang Seng Tech Index. First, in the next six months to a year, some newly listed stocks are expected to be included in the tech index, which will diversify the index structure and open up greater valuation upside.

Second, we are optimistic because the sector’s earnings have bottomed out and are expected to improve. For example, large platform tech stocks have seen their valuations fall to about 15-16 times P/E, which is quite attractive. Moreover, these companies have recently raised their future capital expenditure guidance, which we see as a positive signal. Their willingness to increase capital spending reflects optimism about China’s economic prospects in the next one to two years. This is also a key reason why we are paying renewed attention to large-cap tech stocks.

Dollar Weakens, Still Favor Gold

“21st Century”: The Fed’s latest dot plot still indicates one rate cut within the year, but the rate market has begun pricing in the possibility of rate hikes. How do you view the Fed’s policy this year?

Zheng Zifeng: Starting with the recent Fed meeting, it’s worth noting that Powell has raised inflation expectations for this and next year, but paradoxically, the Fed still expects to cut rates by 25 basis points within the year. The reason is that they anticipate deterioration in the US labor market. Last month’s non-farm payroll data indeed showed some impact on employment. Especially with the escalation of Middle East tensions, rising oil prices, and increasing inflation pressures, corporate profit margins are also under more pressure. Therefore, we believe the Fed still has a high probability of cutting rates, but the timing may be delayed to the second half, with an expected total cut of 50 basis points before the end of the year.

“21st Century”: Despite the recent strengthening of the dollar due to risk aversion, Standard Chartered still expects the dollar to weaken again over the next 12 months and remains bullish on gold. What are the specific reasons?

Zheng Zifeng: First, regarding the dollar, we believe it will remain volatile in the short term, with the dollar index fluctuating between 98 and 100. The main reason is that the Middle East conflict has not yet seen a clear resolution, so risk aversion will continue to support the dollar index. But once diplomatic efforts ease tensions somewhat, we expect the dollar index to decline.

In the second half of the year, two factors should be closely watched. First, the US midterm elections in October, where President Trump is likely to introduce expansionary fiscal policies, including tax cuts, to win voter support. Markets worry this will worsen US fiscal health, and the ongoing Middle East conflict further strains US finances, which supports our medium- to long-term view of de-dollarization.

Second, inflationary pressures from rising oil prices in non-US developed markets remain severe, increasing the likelihood of rate hikes there before year-end. In contrast, the US has room for rate cuts, which will negatively impact the dollar due to interest rate differentials.

As for gold, our medium- to long-term bullish case is based on three points. First, policy uncertainties surrounding Trump. Second, US Treasury yields are high; we expect that as the Fed begins rate cuts, yields will decline, with the 10-year US Treasury yield potentially falling to around 3.75%, providing room for the dollar to weaken and reducing the opportunity cost of holding gold.

Finally, gold is also supported by structural demand, mainly from global central banks, especially in emerging markets, which aim to further reduce reliance on the dollar and increase gold holdings in their foreign exchange reserves.

“21st Century”: In terms of asset allocation, Standard Chartered maintains a 7% gold allocation in its baseline portfolio. How do you forecast gold prices over the next 6-12 months and next year? Do you have target levels?

Zheng Zifeng: We remain bullish on gold in the medium to long term, and recently raised our 12-month target to $5,750 per ounce. From a technical perspective, the 200-day moving average is roughly around $4,100–$4,200, so current levels of $4,200–$4,300 are actually good entry points. Gold, as a long-term hedge against inflation and geopolitical risks, has high allocation value.