Standard Chartered Bank's Zheng Zifeng: Long-term optimistic about gold, target price raised to $5,750

Byline丨Yuan Sijie Intern Zhang Boyang

Edited by丨Li Yanxia Zhu Lina

In early April, international oil prices hovered above $100 per barrel, and the situation in the Middle East continued to keep nerves on edge across global markets.

In its latest report, “Global Markets Outlook for April 2026” (hereafter referred to as the “Outlook”), Standard Chartered Bank calculates that if the conflict lasts only 3 to 4 weeks, the probability of oil prices topping out is 70%; but if high oil prices persist for several months, global inflation will be hit more severely.

Against this backdrop, the bank still maintains an overweight rating for Asia (excluding Japan) and for Chinese stocks. Zheng Zifeng, Chief Investment Officer for North Asia at Standard Chartered, told reporters from 21st Century Economic Herald in a recent interview that since March, major global currencies have generally weakened by about 2% against the U.S. dollar, while the RMB exchange rate has stayed stable; and the performance of A-shares and Hong Kong-listed shares has also outperformed other markets in the region. “Whether from fundamentals or from capital-flow direction, Chinese assets currently have the corresponding support base.”

Signals of China’s economic recovery have also been strengthening in parallel. Data from the National Bureau of Statistics shows that the March manufacturing PMI rebounded to 50.4%, returning to the expansion zone; from January to February, the year-on-year growth rates of value-added for industries above a designated size, retail sales of consumer goods, and fixed-asset investment were 6.3%, 2.8%, and 1.8%, respectively.

Zheng Zifeng summarized this round of “reassessment of Chinese assets” as a triple engine: “fundamentals + valuation + capital flows.” Hong Kong-listed stocks benefit from low valuations and the return of international capital, while A-shares capture the listing dividends of emerging industries such as GPU chips and robotics.

A research note from Industrial Securities stated that since the beginning of this year, the proportion of Middle East sovereign funds participating in Hong Kong IPO cornerstone subscriptions has risen from less than 20% at the start of 2024 to the 38% to 39% range at the start of 2026.

Also according to data from the Hong Kong Exchanges and Clearing Limited, since March this year, international intermediaries have ended the previously one-way trend of capital outflows, gradually starting to see small inflows and shifting to two-way trading: from March 2 to March 18, international intermediaries recorded cumulative net inflows of HKD 210 million.

Although the performance of technology stocks in Hong Kong has recently diverged between small-cap and large-cap names, Zheng Zifeng still has a positive view of the Hang Seng TECH Index’s long-term outlook. He pointed out that the valuations of large-platform companies in Hong Kong have fallen back to 15 to 16 times the price-to-earnings ratio. “Companies are willing to increase capital expenditures, which reflects an optimistic outlook on China’s economy over the next one or two years.” He said that over the next half to one year, newly listed AI and chip companies are expected to be added to the Hang Seng Index, which will also drive greater structural diversification.

In terms of specific allocation strategies in Hong Kong-listed stocks, Zheng Zifeng suggested that clients could put more than 60% of their position into high-quality, high-dividend stocks. For example, the H-shares of non-financial state-owned enterprises that Standard Chartered likes have a dividend yield far higher than A-share listings of the same kind; the remaining 40% can be allocated to undervalued growth stocks.

Regarding the “bull market in gold—has it ended?” hotly debated in the recent market, Zheng Zifeng responded that the Turkish central bank’s sale of $8 billion worth of gold via swaps in recent days is an exception—because gold accounts for more than 40% of its foreign exchange reserves, far above the average for other emerging market countries, which is under 10%. “By contrast, in mature-market central banks, gold allocations are generally in the 25% to 50% range.”

Central banks in emerging markets still have substantial room to increase holdings, and structural demand for de-dollarization has not reversed. It is worth noting that Standard Chartered has raised its 12-month target price for gold to $5,750 per ounce and maintained a 7% allocation in its base portfolio.

Zheng Zifeng believes that from a technical perspective, the 200-day moving average is in the $4,100 to $4,200 range. “At the current $4,200 to $4,300 level, it is actually a good time to buy.”

Chinese assets show resilience

“21st Century”: Against the backdrop of volatile oil prices and heightened tensions in the Middle East, Standard Chartered still maintains an overweight view on Asian (excluding Japan) stocks and maintains an overweight view on China. What is the core reason?

Zheng Zifeng: Based on high-frequency macro data from January and February, growth momentum has already become evident in retail, fixed-asset investment, and industrial value-added. At the same time, the March PMI data recently released has also been quite impressive. With the trend of economic data stabilizing and rebounding, related asset valuations have also fallen back to relatively low levels. Whether from the fundamentals perspective or from the valuation perspective, we believe the market currently has some attractiveness.

In addition, since March, as Middle East conflicts have escalated, during the subsequent weeks of market volatility, Chinese assets have demonstrated a certain degree of resilience—which is reflected in both Chinese stock performance and the performance of the exchange rate. In terms of the exchange rate, since March, major global currencies have generally weakened by about 2% against the U.S. dollar, while the RMB exchange rate has remained steady without any clear depreciation. Second, in the stock market, whether for onshore A-shares or offshore Hong Kong-listed shares, their performance has been better than that of other markets in the region. In summary, whether from fundamentals or from capital-flow direction, the market currently has the corresponding support base.

“21st Century”: In terms of asset allocation, where does the attractiveness of A-shares and Hong Kong-listed shares mainly show up?

Zheng Zifeng: I think this attractiveness can be analyzed from two angles. First, the Hong Kong market’s price-to-earnings ratio is at least about two multiples lower than that of A-shares. Second, Hong Kong’s capital market is relatively more closely connected with international capital. Uncertainty in the Middle East situation is drawing more Middle East capital back to Asian markets, and Hong Kong is a key destination among them.

Looking at the onshore A-share market, we can feel that it has already shown a certain breakthrough-type development trend. Today, China has seen a large number of emerging industries. Whether it’s the GPU chip sector or the robotics field, many emerging “unicorn” companies have chosen to list in A-shares first. Therefore, we believe that if you want to directly participate in the development of emerging industries amid China’s economic growth wave over the next 5 to 10 years, investing in A-shares remains the core way to capture this growth momentum.

Hang Seng TECH set to stop falling and rebound

“21st Century”: Standard Chartered’s latest research report specifically notes that the Hang Seng TECH Index is one of the opportunity-oriented investment views. Given the recent split in performance among technology stocks in Hong Kong, how do you view investment strategies for the technology sector in Hong Kong?

Zheng Zifeng: The differentiated pattern within the technology sector largely reflects the composition of the constituent stocks of the Hang Seng TECH Index. A substantial proportion of large-cap weighting stocks in the index is concentrated in traditional sectors, with more than 40% of the weight coming from the discretionary consumer segment, mainly including two major industries: e-commerce and electric vehicles.

The market generally believes that over the past year, technology index performance has been less than satisfactory due to factors such as intensified industry “involution” and continuous increases in capital expenditures. But if you look at newly listed stocks, especially those in emerging areas such as AI and GPU chips, their performance after listing has, in fact, been fairly outstanding. These types of companies are precisely direct beneficiaries of rising AI capital expenditures. Unfortunately, the proportion of these direct beneficiaries in the current index’s constituent makeup remains low.

However, from a medium- to long-term perspective, we still like the prospects for the Hang Seng TECH Index. First, we expect that over the next half to one year, some newly listed stocks may be added to the technology index constituents, which would make the index structure more diversified and open up more upside room for its valuation.

Second, another reason we continue to like this index is that the sector’s performance has already bottomed out and will gradually improve. Taking large-platform technology stocks as an example, their valuations have fallen back to about 15 to 16 times the price-to-earnings ratio, which is a fairly attractive level. In addition, these companies have recently also raised their guidance for future capital expenditures, which we see as a positive signal. Willingness to increase capital expenditures also reflects an optimistic expectation about China’s economic development over the next one or two years. This is also the main reason we have renewed our focus on large-cap technology stocks.

The U.S. dollar weakens—still bullish on gold

“21st Century”: The Fed’s latest dot plot still provides guidance for one rate cut within the year, but the interest-rate market has started to price in the possibility of rate hikes. How do you look at the Fed’s policy this year?

Zheng Zifeng: I’ll first talk about the results of the Fed’s recent meeting. It’s worth noting that Powell has raised inflation expectations for the current and next two years, but the contradiction is that the Fed still expects to cut rates by 25 basis points within the year. The reason behind this is that they expect the U.S. labor market to deteriorate. The nonfarm payrolls data from last month indeed shows that the employment market has been affected to a certain degree. Especially under the backdrop of intensifying Middle East conflicts, further rising oil prices, and increasing inflation pressures, companies’ profit margin outlooks have also faced additional pressure. Therefore, we believe the Fed still has a relatively high probability of implementing rate cuts, but the timing may be pushed back to the second half of the year, and we expect a total of 50 basis points of rate cuts before the end of this year.

“21st Century”: Even though the dollar has strengthened recently due to heightened risk-aversion sentiment, Standard Chartered still expects the dollar to weaken again over the next 12 months and remains bullish on gold. What is the specific reason?

Zheng Zifeng: First, let’s talk about the U.S. dollar. We believe the U.S. dollar in the short term will maintain a choppy range-bound pattern, and the U.S. dollar index is expected to fluctuate within 98 to 100. The core reason is that, since the Middle East conflict has not yet produced a clear solution, market demand for safe havens will continue to support the dollar index. But once the Middle East situation is eased to a certain extent through diplomatic channels, we expect the dollar index may fall.

We think that going into the second half of the year, two factors should be the focus. First, the U.S. will hold midterm elections in October. President Trump will likely roll out stimulative fiscal policies, including tax cuts, to win support from voters. The market worries that this will further worsen the U.S. fiscal situation, and the ongoing Middle East conflict has also further dragged down the U.S. fiscal position—this is also an important basis for our medium- to long-term view on de-dollarization.

Second, the inflation pressure brought by rising oil prices facing non-U.S. mature markets remains severe, so the probability of non-U.S. mature markets raising rates before the end of this year is continuously increasing. By contrast, the U.S. has room to cut rates in its monetary policy, and this interest-rate differential situation will have an adverse impact on the dollar.

As for gold, our medium- to long-term reasons for being bullish mainly have three points. First, there is uncertainty in the policy orientation of President Trump. Second, current yields on U.S. government bonds are at a high level. We expect that as the Fed begins its rate-cutting cycle, yields will gradually decline, and the yield on the 10-year U.S. Treasury is expected to fall to around 3.75%, which would create downside room for the dollar while lowering the opportunity cost of holding gold.

Finally, gold is also supported by structural demand. This demand comes from global central banks—especially those in emerging markets—which still want to further reduce dependence on the U.S. dollar and increase the proportion of gold in foreign-exchange reserves.

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

Zheng Zifeng: We continue to be bullish on gold over the medium to long term, and we have already raised our 12-month target price to $5,750 per ounce. From a technical analysis perspective, the 200-day moving average is roughly in the $4,100 to $4,200 range; therefore, the current level around $4,200 to $4,300 is, in fact, a good time to buy. As a high-quality investment tool for protecting against inflation and geopolitical risks over the long term, gold has a high allocation value.

SFC

Produced by丨21 Finance Client 21st Century Economic Herald