Bank of East Asia: Major US stock indices are reasonably valued, S&P 500 index target raised to 7,870 points

Glonghui, June 24｜Bank of East Asia has raised its S&P 500 Index target from 7,090 points to 7,870 points. In addition to technology stocks, it is optimistic about sectors such as materials, industrials, and finance, believing that profit growth is expected to accelerate. The bank has also raised its earnings per share forecast for this year to $342, and its 12-month forward price-earnings ratio target to 23 times. Pang Weiwei, Chief Investment Strategist at Bank of East Asia, stated that in the era of an AI boom, as companies benefit from accelerated profit growth and improved return on equity (ROE), a forward price-earnings ratio for major indices above the 10-year average has become the new normal. Unless there is a significant tail risk in financial markets—such as renewed US-Iran conflict, a sharp interest rate hike by the Federal Reserve, or a severe deterioration in the employment and consumer markets—the current valuations of major US stock indices remain at reasonable levels.