UBS maintains its year-end target for the MSCI China Index at 100 points, representing an approximate 20% upside from current levels. The firm anticipates the index could outperform global markets by 5% this year. According to the head of China global financial markets at UBS, Fang Dongming, if conflicts in the Middle East are contained within the next two to three weeks, global economic and equity market momentum could revert to levels seen earlier this year. However, prolonged tensions would likely lead to more cautious investor behavior, prompting economists and strategists to reassess their global economic and market forecasts.
Fang noted that China's lower reliance on imported oil, combined with the resilience of Chinese assets, makes them particularly attractive for global investors seeking portfolio diversification. While it is still early and data has not yet shown significant capital inflows into mainland and Hong Kong equities following the outbreak of Middle East conflicts, UBS expects the MSCI China Index to deliver 5% outperformance versus global benchmarks this year.
Regarding Chinese equities, Fang observed that global investors are showing increasingly positive attitudes toward allocating to these assets, often choosing to invest in both Chinese and U.S. markets. He also emphasized that amid elevated oil prices, more stable Sino-U.S. relations would be beneficial for U.S. economic growth.
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