UBS expects Chinese market to deliver more growth

Multinational investment bank and financial services company UBS is bullish on the Chinese market, and the market's attraction will be strengthened this year, ThePaper reported on Tuesday.

The MSCI China Index has room to rise more than 10 percent, said Lian Peikun, head of China research at UBS Securities.

Chinese assets are attractive, Lian added. Currently, the overall valuation of Chinese assets is still below historical median, although the figure saw a rebound from the low level in 2022.

The consumption recovery in the Chinese market will drive companies' earnings rise, while a recession in developed economies will affect earnings growth in overseas markets in 2023. Therefore, the appeal of the Chinese market is further enhanced, Lian added.

The outlook for Chinese A-share market is positive in 2023, with the earnings growth expected to recover from 4 percent in 2022 to 15 percent in 2023, said Meng Lei, China equities strategist at UBS Securities.

The incremental funds will boost the A-share market performance, Meng said. About 300 billion yuan ($44.31 billion) from the public offering and private offering, respectively, will enter the market in the next six months, and the net inflows of funds through "northbound trading" will hit 200 billion yuan in 2023.

The Hang Seng Index will be bullish, led by factors including the US dollar weakening, the US treasury yields felling and companies' earnings growth; but its high weight of the financial sector result in the resilient will be less than the MSCI China index, said Meng.

Moreover, the China-concept stocks also will be bullish as China-US auditing supervision cooperation progress, profitability elasticity and optimizing supervision, Meng added.