Amid claims of negativity against his successor Roberto Mancini, Hughes saw his Fulham side ripped apart by City.
The Blues cruised into a 3-0 half-time lead before eventually registering a 4-1 success that leaves them just three points adrift of leaders Chelsea.
"If they have belief and there as forward-thinking, and maybe they can be more attack-minded - as they were here - on more occasions, there is no reason why they shouldn't be contenders," said Hughes.
"They were excellent. We were complicit in that with the time we let them have. But they've got as good a chance as anybody."