Business
UBS Forecasts 10% Upsurge in MSCI China Index, Citing Profit Growth and Buy-backs as Key Drivers Over GDP
UBS is optimistic about China, as increased earnings and buy-backs boost MSCI Index by 10%
'The stock market isn't propelled by GDP growth, but by enhancements in ROE and profit growth,' states UBS’s China strategist, James Wang.
The MSCI China Index is expected to experience an increase of up to 10 per cent over the coming three to six months. This prediction by UBS Group is based on the anticipated growth in earnings and companies' efforts to enhance shareholder returns via buy-backs and better governance.
The increase will be propelled by an approximate 7 per cent rise in earnings for firms featured on the index in the latter half, along with some valuation growth, according to James Wang, the chief of China strategy at the Swiss bank. Wang made this statement during a briefing in Shenzhen on Monday.
Intriguingly, our examination of Asian markets, which are usually targeted by investors for their strong economic growth, indicates that the link between yearly GDP growth and stock market performance is incredibly weak," stated Wang. "The stock market's momentum doesn't come from GDP growth, but from enhancements in ROE and profit growth."
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