Business
UBS Forecasts 10% Upsurge in MSCI China Index, Citing Profit Growth and Buy-Backs as Key Market Drivers Over GDP
UBS demonstrates optimism towards China, as profit increases and share repurchases contribute to a 10% rise in the MSCI Index. James Wang, UBS's strategist for China, asserts that the stock market is propelled not by GDP growth but by enhancements in ROE and profit escalation.
The MSCI China Index is likely to see a surge of up to 10% in the coming three to six months. This is expected as a result of increased earnings growth and companies' efforts to enhance shareholder returns via stock repurchases and better governance, as per UBS Group's analysis.
The increases are expected to be propelled by an average profit growth of 7% for firms listed on the index during the latter half of the year, coupled with some valuation augmentation, according to James Wang, the chief of China strategy at the Swiss bank. Wang made these remarks during a briefing held in Shenzhen on Monday.
Intriguingly, our study of Asian markets, which are usually targeted by investors for their robust economic growth, reveals that the link between yearly GDP growth and stock market performance is incredibly weak," Wang stated. "The stock market's momentum doesn't come from GDP growth, but rather from increases in ROE and profit growth."
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