Business
UBS Forecasts 10% Upsurge in MSCI China Index: Profit Growth and Buy-Backs as Key Drivers, not GDP Growth, Says Strategist James Wang
UBS expresses optimism about China, with profit increases and buy-backs providing a 10% boost to the MSCI Index. UBS's China expert, James Wang, asserts that the stock market is influenced not by GDP growth, but by advancements in ROE and profit escalation.
The MSCI China Index is likely to see an increase of up to 10 per cent within the coming three to six months. This predicted growth is attributed to an upswing in earnings and businesses aiming to enhance shareholder returns through stock repurchases and better governance, as per UBS Group's analysis.
The increase will be propelled by an approximate 7 percent surge in earnings for businesses listed on the index during the latter half, along with a bit of valuation growth, according to James Wang, the chief of China strategy at the Swiss bank, who made these remarks during a meeting in Shenzhen on Monday.
Wang intriguingly pointed out that our study of Asian markets, known for attracting investors looking for robust economic growth, reveals a surprisingly low link between yearly GDP expansion and stock market performance. He clarified that the stock market's dynamics aren't driven by GDP growth, rather, improvements in ROE and profit growth are more influential.
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