Economic growth trend analysis in setting capital market expectations

High rates of growth in capital investment are associated with high rates of growth in the economy. However, these high growth rates are not necessarily linked to favorable equity returns. This may be the case because growth rates are already factored into equity prices. An additional explanation is that the source of equity returns is related to the rate of return on capital. If the rate of growth of capital is faster than the rate of economic growth, return on capital may decrease and equity returns may become less attractive.

Can someone explain this paragraph please?

My layman’s understanding: More capital investment does not mean more ROE (although GDP might increase).
Think China, massive investments in ghost towns no one lives in. GDP growth at about 6-7% is achieved by pumping in capital at 20-30% growth rate. This is not efficient use of capital. Hence high investment but low ROE