UBS cuts India to 'neutral', upgrades China on reforms

UBS downgraded India to 'neutral' from 'overweight' and upgraded China to 'overweight', saying Plenum reforms will likely cause China to outperform Asia ex-Japan for the next few months.

"We still like India -- our thesis of weak capex equals higher return on capital still holds. But it is a longer-term theme and for now we believe a Chinese re-rating is likely to steal

the limelight," UBS said in a report.

UBS added that its strategists are positively surprised by the scope and tone of the Plenum document.

It said the prospect of reforms will narrow the valuation gap of China to the region.

The initial outline published at the end of a four-day conclave of China's top leadership disappointed markets with its lack of detail and its ambiguity.

But a more elaborate account released on Friday won praise for its ambition and scope.