worldclasspoker| Wall Street is a big fan! UBS upgrades A-share rating

From: Wall Street

UBS, the Wall Street giant, rarely upgraded the MSCI China index to "overweight", suggesting that A shares fluctuated sharply at a time when market sentiment was improving.

The Sunil Tirumalai team, chief global emerging market equity strategist at UBS, said in a report released on Tuesday that earnings per share (EPS) in the MSCI China index were not affected by real estate.

We have always regarded the MSCI China index as a consumption index, with 55 per cent of the internet and consumer sectors combined and less than 5 per cent of real estate.

In fact, under obvious pressure on the real estate sector over the past 18 months, the overall EPS of China's internet industry grew by 23 per cent, while the consumer sector grew by 2 per cent. This is not reflected in the traditional exponential EPS growth.

According to UBS's preferred index-weighted EPS calculation method, the EPS of the MSCI China Index has fallen by only about 2% in the past 18 months, outperforming it.WorldclasspokerHe is in emerging markets (down about 8%). The largest components of the China index have performed well overall in terms of earnings and fundamentals.

The report also points out that UBS is now more optimistic about profits, given the early signs of recovery in consumption and stronger signals of household savings flowing into the market.

Thanks to signs of economic recovery and improved corporate performance, the MSCI China index has risen more than 13 per cent since its January low, while the Hang Seng index has rebounded by about 12 per cent.

Overall, the performance of China's consumer industry is positive.

Guizhou Moutai broke through the 100 billion yuan mark for the first time in the history of total revenue last year, exceeded analysts' expectations, exceeded its growth target of 15%, and its cumulative annual dividend reached an all-time high. Meituan's income and net profit in the fourth quarter of last year exceeded expectations and turned losses into profits for the whole year.

Data compiled by the media show that the 12-month forward earnings valuation of the MSCI China Index has risen by 1% this month.Worldclasspoker.7%, rebounding to the highest level since the end of 2022.

UBS also said the rebound in A-shares had been driven by new regulatory rules and unexpectedly high dividends and buybacks by local companies.

Prior to this, CIC Securities believed that the new "National Nine articles" clearly emphasized strengthening supervision and risk prevention, fully implementing "long teeth with thorns" and being angular, and the core observation was based on the construction of a good stock market ecological environment after a clear shift from the financing market to the investment market, which was the institutional basis for A shares to enter the medium-term bull market.

China Merchants Securities said that the new "National Nine articles" is different from the previous "National Nine articles", which is more focused on investor-centered and affirms the investment and wealth management attributes of the capital market. If the follow-up policy is effectively implemented, the overall dividend ratio of listed companies is expected to increase significantly, so that the real return of A-shares to investors will be improved. it is expected that the capital market will become an important source of residents' property income after real estate.

China Merchants Securities reviewed the impact of two national nine reviews on A shares in history, and found that after the introduction of "National Nine articles", it has played a great role in boosting the follow-up market performance.

In the report, UBS also upgraded Hong Kong stocks to an additional allocation and downgraded South Korean stocks to neutral.

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