Hong Kong's stock market could surge to as high as 23,000 points by the middle of this year if there’s a revival in the mainland’s economy and property market, according to Citibank.

The bank, however, forecast that high interest rates will continue to weigh on Hong Kong’s property market, with home prices to drop by more than 10 percent by the end of the year.

The bank is tipping mainland internet companies, electric vehicle manufacturers and Macau's gambling sector to outperform in 2024.

“We think the markets have overreacted over the latest [gaming] announcement last month, as the purpose was still to drive the healthy development of the gaming industry and the regulators have showed signs that they are willing to discuss with the industry on how to achieve healthy growth,” said Ka Liu, head of Investment Strategy and Portfolio Advisory at Citibank Hong Kong.

Liu suggested investors increase allocations in US equities, including on the S&P 500 index, small and midcap stocks, and tech-heavy industrial and defence shares, as well as medium to short term investment-grade US corporate bonds.

Japanese and Indian stocks should also be prioritised, he said

“At the moment, investors may not need to prioritise one single market, because we see a broad base of opportunities not only in the US but also across Asia. We suggest investors to have a comprehensive portfolio in 2024 with a different variety of assets to capture on the economic normalisation,” Liu said.

The bank expects the global economy to grow at a faster pace from the second half of this year.