UBS released its 2025 Hong Kong stock market strategy report, predicting that the Hong Kong stock market will face severe challenges in 2025. Even if the United States starts an interest rate cut cycle, the potential for the US to impose a 60% tariff on China and escalating tensions between China and the US could slow down Hong Kong's economic growth, according to UBS economists. Taking into account stock risk premiums, there is a downside risk to the valuation multiples of Hong Kong stocks. It is expected that by the end of 2025, the Hang Seng Index will only reach 20000 points and the MSCI Hong Kong Index will reach 8400 points, roughly maintaining their current levels. UBS points out that the equity risk premiums (ERP) of the Hang Seng Index and MSCI Hong Kong are 0.1 to 0.4 standard deviations higher than historical averages. The market has not fully reflected the geopolitical challenges of Trump returning to office, and it is expected that by the end of next year, the P/E ratio of the Hang Seng Index will further decrease from the current 8.9 times to 8.1 times. In terms of potential tariff impacts, UBS indicates that mainland China and Hong Kong stocks are less directly affected by US tariffs but will be indirectly impacted by the overall economic downturn. Under the latest defensive investment strategy, UBS has added Cathay Pacific (00293) and Cheung Kong Infrastructure (01038) to its focus list, while removing Galaxy Entertainment (00027) and AIA (01299). Link REIT (00823) and Wharf Real Estate (01997) remain as Hong Kong stocks that the bank is not optimistic about. UBS is most bullish on Hang Lung Properties (00012), New World Development (00016), PCCW (00008), BOC Aviation Leasing (02588), Cheung Kong Infrastructure (01038), Cathay Pacific (00293), and Sands China (01928). UBS is least optimistic about MTR Corporation (00066), Link REIT (00823), Wharf Real Estate (01997), and Henderson Land Development (01113).