Business
UBS Forecasts 10% Upsurge in MSCI China Index, Cites Profit Growth and Buy-backs as Key Drivers, not GDP
UBS is optimistic about China due to rising profits and stock buy-backs, which could potentially boost the MSCI Index by 10%. UBS's China strategist, James Wang, stated that the stock market is influenced not by GDP growth, but by enhancements in ROE and profit growth.
The MSCI China Index is likely to see an increase of up to 10 per cent in the coming three to six months. This anticipated growth is due to an expected rise in earnings and companies' efforts to enhance shareholder returns through buy-backs and better governance, as per UBS Group's prediction.
The increase will be fueled by a median profit growth of 7% for firms listed on the index in the latter half, coupled with some valuation growth, according to James Wang, the chief of China strategy at the Swiss bank, who spoke at a briefing in Shenzhen on Monday.
Fascinatingly, our examination of Asian markets, where investors usually aim for significant economic expansion, reveals that the relationship between yearly GDP growth and stock market performance is incredibly minimal," stated Wang. "The stock market is influenced not by GDP growth, but by enhancements in ROE and profit growth."
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