UBS overweight on China stocks despite EM rally sustainability concerns

From Investing.com: 2024-07-02 21:07:30

UBS analysts remain overweight on Chinese stocks despite recent pullback, questioning sustainability of emerging market rally. MSCI EM stock index up 7.7% in 2024, driven by top 5 stocks in AI/internet sectors. EM valuations discounted, slower returns expected in second half amid US elections, delayed rate cuts, strong dollar.

EM markets forecasted to outpace developed markets in earnings growth next two years, with Taiwan, South Korea tech stocks leading. UBS overweight on China despite recent decline from 2024 peaks, citing potential outperformance with more government support, stabilizing earnings growth post-COVID lows. Chinese Communist Party’s Third Plenum in July to potentially unveil more stimulus.

UBS upgrades South Africa to Overweight, citing reduced political uncertainty, market-friendly policies. Singapore upgraded to Neutral from Underweight due to better valuations, strong earnings, especially in banks. Latin America bearish outlook with Brazil downgraded to Neutral, Mexico to Underweight.



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