UBS Predicts 10% Upsurge in MSCI China Index Driven by Profit Growth and Buy-backs, Not GDP Growth, Says China Strategist James Wang

UBS displays optimism towards China, with the surge in profit growth and buy-backs contributing to a 10% increase in the MSCI Index. According to UBS's China strategist, James Wang, the stock market's driving force isn't GDP growth, but enhancements in ROE and the rise in profits.

The MSCI China Index is expected to see an increase of up to 10 per cent within the next quarter to half a year. This prediction by UBS Group is based on the anticipation of accelerated profits, along with companies aiming to enhance shareholder returns via stock repurchases and better corporate management.

The anticipated increase is expected to be fuelled by an average profit growth of 7% for firms listed on the index in the latter half of the year, along with some valuation expansion, according to James Wang, the chief of China strategy at the Swiss bank. He shared this information during a briefing in Shenzhen on Monday.

Fascinatingly, our examination of Asian markets—where investors generally pursue significant economic expansion—indicates that the connection between yearly GDP growth and stock market performance is incredibly weak," Wang stated. "The force behind the stock market isn't GDP growth, but enhancements in ROE and profit growth."