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UBS Optimistic on China: Profit Growth and Buy-backs Projected to Boost MSCI Index by 10%
UBS is optimistic about China, as increased profits and repurchases boost the MSCI Index by 10%
'The stock market isn't propelled by GDP growth, but by enhancements in ROE and profit growth,' says James Wang, UBS's China strategist.
The MSCI China Index is likely to experience an increase of up to 10 per cent within the coming three to six months. This is due to the expected growth in earnings and the efforts of companies to enhance shareholder returns through stock buybacks and better governance, as predicted by UBS Group.
The increase will be propelled by an approximate 7% rise in earnings for companies listed on the index in the latter half, along with some valuation growth, as stated by James Wang, the chief of China strategy at the Swiss bank, during a briefing in Shenzhen on Monday.
Fascinatingly, our examination of Asian markets, where investors usually pursue significant economic growth, indicates that the relationship between yearly GDP growth and the performance of the stock market is incredibly minimal," stated Wang. "The factor influencing the stock market isn't GDP growth, but enhancements in ROE and profit growth."
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