Business
UBS Predicts 10% Upsurge in MSCI China Index, Citing Profit Growth and Buy-Backs as Key Drivers
UBS shows optimism towards China, as profit increase and repurchases provide a 10% boost to the MSCI Index.
'The stock market is not driven by GDP growth, but by enhancements in ROE and profit increase,' states UBS's China strategist James Wang.
The MSCI China Index is likely to experience up to a 10 per cent increase in the coming three to six months. This is anticipated due to an uptick in earnings growth and companies' efforts to enhance shareholder returns via buy-backs and better governance, as per UBS Group's predictions.
The increase will be fueled by an approximate 7% rise in earnings for firms listed on the index in the latter half, and a bit of valuation enhancement, according to James Wang, who leads China strategy at the Swiss bank. He stated this during a Shenzhen briefing on Monday.
Fascinatingly, our study of Asian markets, where investors usually aim for significant economic expansion, reveals a very low link between yearly GDP increase and stock market performance," Wang stated. "The factor propelling the stock market is not GDP growth, but enhancements in ROE and profit growth."
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