Zhi Tong Cai Jing·2026-02-26 07:28Core Viewpoint - Morgan Stanley suggests investors take profits on certain Hong Kong utility stocks due to their outperformance compared to the Hang Seng Index, driven by local bank and property stock momentum [1] Group 1: Market Performance - The Hong Kong utility sector has outperformed the Hang Seng Index by 5% year-to-date and by 7% since the second half of last year, primarily influenced by the performance of local banks and real estate stocks [1] - The average dividend yield of Hong Kong utility stocks is 4.4%, which is only about 30 basis points higher than the U.S. Treasury yield of approximately 4% [1] Group 2: Company Ratings and Recommendations - Morgan Stanley downgraded the ratings of CLP Holdings (00002) and Hong Kong and China Gas (00003) to "Neutral" due to limited dividend growth potential, with target prices raised to HKD 74 and HKD 7.6 respectively [1] - The preferred stock is Cheung Kong Infrastructure (01038), which, despite a lower dividend yield of 4.1%, has room for dividend increases due to favorable earnings from its UK and Australian operations benefiting from a weaker dollar and regulatory resets; the target price has been raised from HKD 58 to HKD 69 with a rating of "Overweight" [1]