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UBS Predicts 10% Upsurge in MSCI China Index: Profit Growth and Buy-backs Key, Not GDP Growth, Says China Strategist James Wang
UBS shows optimism towards China, as the rise in profits and repurchase of shares contribute to a 10% increase in the MSCI Index.
'The stock market's momentum is not determined by GDP growth, but by enhancements in ROE and profit growth,' says James Wang, UBS's strategist for China. 'The stock market's momentum is not determined by GDP growth, but by enhancements in ROE and profit growth,' says James Wang, UBS's strategist for China.
The MSCI China Index is anticipated to potentially increase by up to 10 per cent in the upcoming three to six months. This prediction from UBS Group attributes the potential rise to an expected increase in earnings growth and companies' efforts to enhance shareholder returns via stock repurchases and better governance.
The increase will be propelled by an average profit growth of 7% for firms listed on the index during the latter half of the year, coupled with some valuation growth, stated James Wang, the Chief of China Strategy at the Swiss bank, during a meeting in Shenzhen on Monday.
"Wang intriguingly points out that our study of Asian markets, which are usually the go-to for investors seeking significant economic growth, reveals that there's a very weak link between yearly GDP growth and the performance of the stock market. He asserts that the factors influencing the stock market are not related to GDP growth, but rather enhancements in ROE and profit growth."
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