UBS Group AG joined other banking peers in lowering its forecast for Chinese stocks this year, citing slowing growth momentum in the world’s second-largest economy.
(Bloomberg) — UBS Group AG joined other banking peers in lowering its forecast for Chinese stocks this year, citing slowing growth momentum in the world’s second-largest economy.
The Swiss banking group revised its year-end target for the MSCI China Index to 72 from 83 set in January, based on a reduced earnings growth forecast of 15%, according to James Wang, head of China strategy for UBS Investment Bank Research. The index closed at 61.33 Wednesday.
“Policy stimulus represents the biggest swing factor for the market in the second half of the year,” Wang wrote in a note. “That said we believe overall investor expectations are not high.”
In April, Wang was expecting robust earnings growth of 20% in 2023, citing a potential consumption recovery and improving wage growth in China. The MSCI China Index has lost 20% since a January high, worse than the performance of any primary index globally, data compiled by Bloomberg shows.
China is fighting back against mounting investor pessimism. The central bank has stepped in to support the currency for a third time this week, and authorities earlier suspended a prominent finance writer and two of his peers for spreading “negative and harmful information” about the country’s stock market.
UBS joined a list of investment banks that recently reduced their forecast on Chinese stocks. Strategists at Goldman Sachs Group Inc., Nomura Holdings Inc. and Morgan Stanley have all slashed their targets on the benchmark over varying periods by at least 11%.
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