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UBS Predicts 10% Upswing for MSCI China Index: Profit Growth and Buy-Backs, Not GDP, Are Market Drivers, Says China Strategist
UBS displays confidence in China, as profit increase and buy-backs provide a 10% boost to the MSCI Index
'What propels the stock market isn't GDP growth, rather enhancements in ROE and profit growth,' says UBS’s China strategist James Wang.
UBS Group predicts that the MSCI China Index is likely to experience up to a 10 per cent increase within the next three to six months. This forecast is based on the expectation of escalating earnings growth and companies' endeavors to enhance shareholder returns via buy-backs and better governance.
The increase will be fueled by an average profit growth of 7% for firms listed on the index during the latter half of the year, along with some value augmentation. This information was shared by James Wang, the chief of China strategy at the Swiss bank, during a Monday briefing in Shenzhen.
Fascinatingly, our examination of Asian markets, where investors usually hunt for substantial economic expansion, indicates that the association between yearly GDP growth and stock market performance is incredibly weak," Wang stated. "It's not GDP growth that propels the stock market, but rather advancements in ROE and profit growth."
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