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UBS Predicts 10% Upsurge in MSCI China Index Fueled by Profit Growth and Buy-backs, Downplays GDP Growth’s Role in Stock Market Performance
UBS expresses optimism about China, with profit increases and buy-backs resulting in a 10% rise for the MSCI Index.
"The stock market's momentum isn't driven by GDP growth, but by enhancements in ROE and profit expansion," says UBS's China expert, James Wang.
The UBS Group anticipates the MSCI China Index to potentially increase by up to 10% within the next quarter to half a year. This is likely due to the surge in profit growth and businesses aiming to enhance shareholder returns via repurchases and better governance.
The increase will be propelled by an estimated 7 percent rise in earnings for businesses listed on the index during the latter half of the year, along with some valuation growth, according to James Wang, the chief of China strategy at the Swiss bank. Wang made these remarks during a Monday meeting in Shenzhen.
Fascinatingly, our study of Asian economies, which are usually targeted by investors for their rapid economic expansion, reveals a negligible link between yearly GDP growth and the performance of the stock market," Wang stated. "The stock market isn't propelled by GDP growth, but rather by enhancements in ROE and profit growth."
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