Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The FOMC is positioned to wait for more clarity on inflation and economic activity, with a careful approach to adjusting monetary policy due to elevated uncertainty [2][3] - Most participants believe that some reductions in the fed funds rate would likely be appropriate this year, with a median forecast of two cuts in 2025 [3][4] - The Fed staff's economic forecast indicates higher GDP growth through 2027 compared to previous forecasts, primarily due to trade policy announcements [4][8] Summary by Sections FOMC Meeting Minutes - Participants generally agreed on a wait-and-see approach regarding inflation and economic activity, noting that uncertainty had decreased since the May meeting [2] - A few participants suggested that tariffs might only lead to a one-time price increase, while most noted the risk of persistent inflation effects [4] Economic Forecasts - The Fed staff's forecast includes higher GDP growth through 2027 and a lower inflation projection than in May, with expectations for inflation to return to the 2% target by 2027 [8] - The staff anticipates that tariff increases will raise inflation this year and provide a small boost in 2026 [8] Communication Strategy - A preliminary discussion was held regarding potential changes to the Summary of Economic Projections and the addition of alternative scenarios to the FOMC's communications strategy [9]

9 July 2025 | 1:20PM SGT Base Metals Comment: Copper: Pricing a Higher Copper Tariff Eoin Dinsmore +65-6889-2401 | eoin.dinsmore@gs.com Goldman Sachs (Singapore) Pte Lavinia Forcellese +44(20)7774-9243 | lavinia.forcellese@gs.com Goldman Sachs International Aurelia Waltham +44(20)7051-2547 | aurelia.waltham@gs.com Goldman Sachs International Daan Struyven +1(212)357-4172 | daan.struyven@gs.com Goldman Sachs & Co. LLC Samantha Dart +1(212)357-9428 | samantha.dart@gs.com Goldman Sachs & Co. LLC Alec Phillips ...

Investment Rating - The report maintains a "Buy" rating for Eoptolink and Innolight, with target prices raised significantly to reflect updated volume estimates and market conditions [73]. Core Insights - The optical transceiver industry is expected to experience robust growth driven by a rising attach ratio of transceivers to GPUs and ASICs, with significant increases in volume estimates for 800G and 1.6T transceivers [2][7]. - The demand for 800G transceivers is projected to reach 19.9 million units in 2025 and 33.5 million units in 2026, representing increases of 10% and 58% respectively [2][16]. - The report highlights two key investment themes: the potential for second-tier transceiver makers like HG Tech to benefit from demand overflow and the valuation convergence between Eoptolink and Innolight [3][44]. Summary by Sections Industry Outlook - The optical transceiver market is expected to grow by 60% in 2025 and 52% in 2026 in dollar terms, primarily driven by higher volumes of 800G and 1.6T transceivers [16][73]. - The attach ratio of transceivers to GPUs is increasing, with the latest B300 GPU requiring 4 to 4.5 transceivers, compared to 2 to 3 for earlier models [8][53]. Company-Specific Insights - Eoptolink's target price has been raised from Rmb 97.1 to Rmb 177, reflecting an 82% increase, while Innolight's target price has been adjusted from Rmb 115 to Rmb 160, a 39% increase [73]. - Eoptolink is expected to achieve a net profit growth of 163% in 2025, while Innolight is projected to grow by 43% in the same year [74]. Investment Themes - The report identifies HG Tech as a potential beneficiary of demand overflow due to its established capacity and ongoing product testing for 800G transceivers [44][50]. - The convergence in valuation between Eoptolink and Innolight is anticipated, with Eoptolink trading at a discount despite similar profit levels and growth rates [26][27]. Key Metrics - The report outlines significant changes in revenue and net profit estimates for the companies covered, with Eoptolink's net profit expected to increase by up to 42% from 2025 to 2027 [2][73]. - The optical transceiver market is projected to require substantial new capacity to meet the anticipated demand, particularly for 800G transceivers [45][72].

Investment Rating - The report maintains a "Sell" rating on both Sangfor and Venustech, indicating a cautious outlook on the cybersecurity sector [2][17]. Core Insights - The management of Qi An Xin sees generative AI as a significant opportunity in the cybersecurity market, which could lead to increased demand for upgraded cybersecurity solutions due to the intensification of cyber attacks [4][9]. - The integration of generative AI is expected to enhance the accuracy and efficiency of cybersecurity software, particularly in risk detection and analysis, which could attract more clients [4][7]. - There is a noted trend of clients shifting their software budgets from functional tools to generative AI software, which is anticipated to drive average revenue per user (ARPU) and attract new paying customers [2][4]. Summary by Sections Company Profile - Qi An Xin, founded in 2014, specializes in cybersecurity, providing software and services to government and enterprise clients. The company has advanced capabilities in endpoint security, cloud security, threat intelligence, and situation awareness [3]. Generative AI Opportunities - Management believes that generative AI will trigger an increase in cyber attacks, creating a potential for upgrading cybersecurity solutions. The company plans to launch the QAX-GPT Security Robot in 2024, which will utilize its self-developed QAX security foundation model to assist security professionals [4][7]. Integrated Cybersecurity Framework - Establishing an integrated cybersecurity framework is deemed more critical than deploying standalone security products. Management emphasizes that platform-based solutions with broad coverage and interoperability will enhance user experience [8]. 2025 Performance Outlook - The management expresses low visibility on near-term demand recovery in the cybersecurity market due to macroeconomic constraints affecting client budgets, particularly in government sectors. However, there is a positive outlook for demand from certain enterprise clients, such as financial institutions and telecom operators [9]. The company is focusing on leveraging generative AI to enhance product offerings and reduce operational costs while improving cash flow [9].

Investment Rating - The report assigns a "Buy" rating to Kingsoft Office, Kingdee, and Empyrean [5][31]. Core Insights - The momentum of AI-native applications and software with AI features remains strong, particularly in the areas of agentic AI and multi-modal AI models [1][4]. - AI agents are expected to become the new user interface for enterprises, enhancing productivity through proactive responses to environmental changes [4][12]. - The release of upgraded multi-modal AI models focuses on generating and editing various content types with improved quality and lower costs [4][13]. - There is a solid project pipeline for enterprise application wins, particularly in AI model deployment, indicating a larger scale of AI projects compared to traditional ERP or system upgrades [21][4]. Summary by Sections AI Agents and Applications - AI agents are being adopted by enterprises to complete tasks independently, with companies like Manus launching general AI agents and Kingdee introducing multiple specialized AI agents [4][12]. - The report highlights the potential of AI agents to improve user experiences in various sectors, including finance and travel [4][12]. Multi-modal AI Models - Recent upgrades in multi-modal AI models have been made by vendors, focusing on high-quality content generation across different media types [4][13]. - Companies like Stepfun and Wondershare are developing advanced tools for image and video editing, enhancing user capabilities [4][13]. Software Project Wins - The report reviews enterprise application project wins, noting a solid momentum in AI model deployments from late April to the present [21][4]. - The scale of AI projects is generally larger due to the inclusion of integrated solutions, which often require higher computing hardware costs [21][4]. EDA and IP Software Expansion - Local EDA suppliers are accelerating product launches to capture localization opportunities, with new tools being introduced for mixed-signal SoC and digital simulation [4][21].

Investment Rating - The report raises the S&P 500 return forecasts to +3% (6400), +6% (6600), and +11% (6900) for the next 3, 6, and 12 months respectively, indicating a positive outlook for the index [2][3]. Core Insights - The report attributes the revised forecasts to earlier and deeper Fed easing, lower bond yields, and the fundamental strength of large stocks, leading to a revised forward P/E forecast of 22x [2][8]. - EPS growth forecasts are maintained at +7% for both 2025 and 2026, but there are risks to these estimates due to the shifting tariff landscape [12][23]. - The report anticipates a broadening of the market rally in the coming months, despite current narrow market breadth, which is one of the lowest in decades [17][23]. Summary by Sections S&P 500 Forecasts - The S&P 500 return forecasts have been raised to +3% (6400), +6% (6600), and +11% (6900) for the next 3, 6, and 12 months respectively, up from previous targets of 5900, 6100, and 6500 [2][3]. - The report indicates that the new year-end S&P 500 forecast ranks at the upper end of strategist estimates [3]. Earnings and Valuation - The forward P/E forecast has been revised to 22x from 20.4x, supported by improved economic conditions and investor sentiment [8][12]. - EPS growth forecasts remain at +7% for both 2025 and 2026, with the report noting potential risks due to tariffs and inflation [12][23]. Market Dynamics - The report highlights a narrow market breadth, with the median S&P 500 constituent over 10% below its 52-week high, suggesting a potential for a "catch up" among laggards [17][23]. - The report expects that as the Fed resumes its cutting cycle, the market will likely see further upside, supported by neutral investor positioning [23][29]. Investment Recommendations - Three key investment strategies are recommended: 1. Balanced sector allocation with overweights in Software & Services, Materials, Utilities, Media & Entertainment, and Real Estate [38]. 2. Focus on Alternative Asset Managers, which have lagged despite an improving capital markets backdrop [45]. 3. Target companies with high floating rate debt, which are expected to benefit from lower bond yields [52].

Investment Rating - The report does not explicitly provide an investment rating for Time Interconnect (1729.HK) Core Insights - Time Interconnect is expected to experience revenue growth in 2025 driven by rising AI demand, production site diversification, and exposure to various end markets [1][8] - The company reported revenues of HK$7.4 billion in 2024, with a gross margin of 14.6% [3] - The revenue from server ODM business reached HK$3.2 billion in 2024, accounting for 43% of total revenue [7] Summary by Sections Industry Overview - Time Interconnect specializes in customized copper and optical fiber cables, as well as servers ODM, with production sites in mainland China, Japan, and Mexico [3] - Key applications include telecommunications, data centers, industrial equipment, medical equipment, and automotive wiring harnesses [3] Growth Drivers - AI demand is driving the adoption of high-speed cables, with a reported 208% year-over-year growth in high-speed cable revenues in 2024 [4] - 42% of cable assembly revenues were derived from data center clients in 2024, indicating strong demand from this sector [4] Business Outlook - Management is optimistic about revenue growth in 2025, supported by the expansion of the Mexican production site and increasing capex spending from Chinese CSP clients [8] - The planned acquisition of Leoni AG is expected to diversify the business into automotive cables and wiring harnesses [8]

Investment Rating - The report indicates a negative skew in economic data surprises across developed markets (DMs) [2][4]. Core Insights - The GS Macro Data Assessment (MAP) Surprise Indices have turned negative across DMs over the last several weeks, indicating a decline in economic performance relative to expectations [2][4]. - The Global Financial Conditions Index (FCI) has eased primarily due to movements in equities and credit spreads, suggesting tighter financial conditions impacting growth [9][30]. - The Current Activity Indicator (CAI) for June shows a global value of +1.9%, with emerging markets performing better than developed markets [49][46]. Summary by Sections Economic Indicators - The MAP surprise indices reflect a negative trend in economic indicators across multiple developed countries, suggesting a downturn in economic activity [2][4]. - The CAI for June indicates a +1.9% growth globally, with emerging markets like India and China showing stronger performance compared to developed markets [49][46]. Financial Conditions - The Global ex Russia FCI has eased, primarily influenced by equity markets and credit spreads, indicating a tightening of financial conditions that could affect GDP growth [9][30]. - The report highlights that the FCI levels across various countries have shown significant changes, with notable tightening in regions like China and Turkey [37][30]. GDP Forecasts - The report presents changes in GDP forecasts for 2025, with Vietnam projected to grow by 1.9%, while the US shows a downward adjustment [92][93]. - The GDP forecast adjustments reflect a broader trend of declining growth expectations across developed markets compared to emerging markets [92][93].

Investment Rating - The report assigns a "Buy" rating to several companies in the clean energy sector, including Array Technologies Inc. ($7.79), First Solar Inc. ($185.03), Fluence Energy Inc. ($8.41), NextEra Energy Inc. ($73.88), Nextracker ($66.31), Shoals Technologies ($5.98), and Sunrun Inc. ($10.50) [20] Core Insights - The recent tax bill passed by the House is seen as incrementally positive for clean energy, particularly for utility-scale solar and storage stocks [10] - The timeline for 45X credits for solar and battery components has been preserved until 2031, which is viewed as better than expected [2] - The 25D tax credit will no longer apply to expenditures made after December 31, 2025, but residential solar via third-party ownership will still have access to tax credits until the end of 2027 [3] - The bill allows solar facilities that begin construction within 12 months of enactment to qualify for full tax credits, potentially accelerating bookings and orders [4] - The exemption of battery storage from certain tax credit revisions is expected to increase battery attach rates on residential solar installations [10] Summary by Sections Clean Tech Impact - The 45X credits for solar and battery components will terminate after 2031, but the timeline is better than previous iterations [2] - The 25D tax credit will not apply to expenditures after December 31, 2025, but residential solar via third-party ownership can access tax credits until the end of 2027 [3] - The 48E investment tax credit for solar facilities requires them to be placed into service by the end of 2027, with exemptions for those starting construction within 12 months [4] Utilities Impact - The provision allowing projects to receive credits if construction begins within a year of the bill's enactment could lead to a pull forward of safe harboring projects [11] - Companies with strong balance sheets and access to capital are expected to benefit from this provision [11] - Positive earnings growth trajectory is anticipated for NextEra Energy (NEE) post-bill passage, with most projects safe harbored through 2029 [12]

Investment Rating - The report upgrades Sumitomo Electric Industries (SEI) to Buy from Neutral, and Furukawa Electric to Neutral from Sell [1][39] Core Insights - The industrial electronics sector is experiencing increased demand for optical products driven by generative AI and data centers, leading to significant capacity expansion investments [2] - The report highlights the shift towards medium-distance data center interconnections (DCI) due to land and power constraints, creating additional demand for optical fiber products [17] - SEI is expected to see a substantial increase in profit contribution from its infocommunications business, which is projected to rise from 6% in FY3/25 to approximately 20% in FY3/28 [41][43] Summary by Sections Market Trends - Demand for optical products is significantly exceeding supply, prompting companies to invest in capacity expansion [2] - The emergence of projects like Stargate in the US, Japan, and UAE is expected to sustain high levels of investment in data center construction [2] Company Performance - SEI's operating profit estimates for FY3/26-FY3/28 have been raised by 11%/11%/12% due to increased demand for optical products [51] - Furukawa Electric is expected to benefit from marginal profit growth due to rising demand for its products [1] Financial Estimates - New sales and operating profit estimates for SEI show a 4% increase in sales for FY3/26, FY3/27, and FY3/28 [11] - The target price for SEI has been raised to ¥4,300 from ¥2,800, reflecting the expected growth in the infocommunications segment [54][55] Competitive Landscape - SEI holds a significant market share in ultra-high density optical fiber cables, estimated at around 50% globally [48] - The report notes that Fujikura and SEI are leading in ultra-multi-core optical fiber cables and optical connectors, while Furukawa Electric is attempting to catch up through acquisitions [9]