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UBS Predicts 10% Upsurge for MSCI China Index, Citing Profit Growth and Buy-Backs as Key Drivers, Not GDP
UBS is optimistic about China, as increased profits and buy-backs boost MSCI Index by 10%
'The stock market is propelled not by GDP growth, but rather by enhancements in ROE and profit expansion,' says James Wang, UBS's strategist for China.
The MSCI China Index is expected to increase by up to 10% within the next three to six months. This prediction, made by UBS Group, is due to anticipated earnings growth and companies' efforts to enhance shareholder returns through share buy-backs and better governance.
The increase will be propelled by an approximate 7% profit rise for corporations listed on the index in the latter half, along with some evaluation enlargement, as stated by James Wang, the chief of China strategy at the Swiss bank, during a Shenzhen briefing on Monday.
Fascinatingly, our examination of Asian markets, favored by investors for their potential for significant economic growth, reveals a surprisingly weak link between annual GDP growth and stock market performance," Wang stated. "GDP growth isn't the primary factor influencing the stock market, instead, enhancements in ROE and profit growth are."
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