Chinese stocks to continue outgunning global peers as UBS wealth managers join bullish camp on second-half outlook
- UBS Wealth Management sees MSCI China gaining 7 to 10 per cent on annual basis in 2022 with certainty in economic recovery, tailwind in corporate earnings
- Fund flows suggest investors are turning upbeat on Chinese stocks despite ‘big swing factor’ in zero-Covid policy
The MSCI China Index, the broadest gauge of stocks listed in mainland and offshore markets, could end the year with a 7 to 10 per cent gain over 2021, according to Hu Yifan, chief investment officer for Greater China at UBS Wealth Management in Hong Kong.
“We are particularly optimistic about the China market in the second half, mostly because the recovery of the economy would be a certain event,” she said at a briefing on Wednesday. “We estimate that profits of [Chinese] companies for the whole year could go up by 10 per cent.”
In the short term, UBS is bullish on companies in the digital economy, supply chains of electric cars, renewable energy, and cyclical stocks and value stocks in energy and banking sectors, Hu added, without singling out specific stocks.
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The MSCI China Index, which tracks 739 companies with US$2.1 trillion of market capitalisation, would have to climb as much as 24.6 per cent in the second half to meet the top-end of UBS’s annual target. The gauge advanced 5.7 per cent in June, the best in 17 months, while global stocks slumped 8.6 per cent into bear-market territory.
Strategists at Goldman have remained bullish on Chinese stocks despite the wild swings this year, after the index slumped 21.6 per cent in 2021 and hit a two-year low in the mid-March rout. Credit Suisse said Chinese stocks are still cheap and it’s not too late to fish near the bottom of the market.