Investment Rating - The report does not explicitly provide an investment rating for the manufacturing sector but discusses the challenges and potential for productivity growth in the context of globalization and technological advancements [3][54]. Core Insights - The report identifies an unprecedented stagnation in global manufacturing productivity over the last 20 years, attributing it to factors such as globalization, weak investment post-global financial crisis (GFC), and a slowdown in technological innovation [3][51]. - Import competition from China has negatively impacted domestic manufacturing productivity growth in developed markets (DMs), with estimates suggesting a reduction of over 0.5 percentage points in annual productivity growth due to increased import penetration [16][26]. - The report emphasizes that the biggest driver of slow manufacturing productivity growth is a decline in the pace of innovation, particularly in information and communication technology (ICT) and electronics manufacturing, which has slowed annualized productivity growth by 1.5-2 percentage points in most DMs [39][40]. Summary by Sections Globalization and Chinese Manufacturing - The report discusses how increased import competition from China has led to lower capacity utilization and reduced new factory investment in DMs, contributing to a decline in productivity growth [15][26]. - A 1 percentage point increase in import penetration from China is estimated to lower annual DM manufacturing productivity growth by 0.1-0.2 percentage points, with effects persisting for at least six years [16][20]. Weak Investment Post-GFC - The report highlights that weak investment following the GFC has significantly hindered manufacturing productivity growth, with real manufacturing investment in DMs slowing by approximately 4 percentage points relative to pre-GFC trends [31][34]. - It estimates a drag of about 0.8 percentage points on annualized productivity growth over the 10 years post-crisis due to this weak investment environment [32][35]. Technological Slowdown - The report indicates that the slowdown in manufacturing productivity is largely driven by a stepdown in innovation, particularly in electronics manufacturing, which has seen a deceleration in productivity growth due to the exhaustion of easy gains from technological advancements [39][40]. - Total factor productivity has stagnated across DMs over the last 20 years, suggesting a broader slowdown in technological progress [44][50]. Implications for the Outlook - The report concludes that while recent policy efforts, such as tariffs and investment promises, may provide some support to domestic manufacturing productivity, a significant turnaround is unlikely without a meaningful pickup in the pace of innovation, particularly from advancements in robotics and generative AI [54][57].

Investment Rating - The report indicates a low probability of major supply disruptions, with current market pricing reflecting less than 4% probability of such events occurring this year [4][18][19]. Core Insights - Oil prices have returned to near pre-escalation levels, with Brent crude currently in the high $60s range, following a muted geopolitical response from Iran [3][6]. - The geopolitical risk premium in the oil market has significantly decreased, falling from nearly $15 per barrel to below $1 per barrel [7][18]. - Market expectations for Brent prices in September and December 2025 suggest a 60% chance that prices will remain in the $60s, with a 28% probability of exceeding $70 [11][14]. Summary by Sections Market Pricing of Supply Disruptions - The probability of a major supply disruption, such as a closure of the Strait of Hormuz, has decreased from around 15% to below 4% [3][18][19]. - The report highlights a disconnect between oil market pricing and Polymarket predictions regarding supply disruptions, with oil markets consistently pricing lower probabilities [22][25]. Geopolitical Risk Premium - The geopolitical risk premium has sharply declined, reflecting traders' experiences with geopolitical shocks that did not lead to significant oil supply disruptions [3][25]. - The report attributes this decline to various factors, including Iran's restrained response and strong incentives from the US and China to avoid large disruptions [25]. Price Expectations - The market's modal expectation for Brent prices in September 2025 remains in the $60s, with a wider distribution for December 2025 prices [14][16]. - The report suggests that the risks to Brent prices in December 2025 are now roughly symmetric, contrasting with the short-term upside skew observed previously [14][16].

Investment Rating - The report suggests a focus on hedging strategies due to elevated macroeconomic and policy uncertainty, indicating a cautious investment stance in the current environment [3][4]. Core Insights - Elevated macroeconomic and policy uncertainty is expected to maintain high equity volatility in the second half of the year, with potential catalysts such as tariff deadlines and geopolitical tensions [3][4]. - Stagflationary shocks pose a significant risk to balanced portfolios, particularly with inflation risks driven by tariffs, while a reflationary rebound could enhance growth optimism [3][4]. - Recent shifts in investor option positioning indicate a more bearish outlook on equities, while bullish positioning in EUR/USD has begun to moderate [3][4]. Summary by Sections Macroeconomic Environment - The probability of remaining in a high volatility regime for the S&P 500 is elevated, primarily due to ongoing macroeconomic uncertainty and potential negative surprises from various geopolitical events [4][5]. - The report anticipates a deceleration in US GDP growth to 1.25% year-over-year by Q4, influenced by recent labor data and declining hard economic indicators [4][7]. Hedging Strategies - The report identifies optimal hedges for stagflationary scenarios, including puts on USD high-yield credit and S&P 500 equal-weight, which are seen as attractive due to their low implied volatility relative to equity volatility [11][14]. - In a reflation scenario, rates payers and calls are highlighted as optimal hedges, with the implied volatility of longer-dated bonds having reset to near post-2020 lows [13][16]. Investor Positioning - Recent data shows a shift towards bearish positioning in equities, while bullish sentiment has increased in commodities like oil and gold [20][22]. - The report suggests that call options on EURO STOXX Banks and US Financials are attractive as upside hedges, while puts on MSCI EM and other emerging markets can serve as downside protection [16][20].

Investment Rating - The report assigns a Neutral rating to Ascletis Pharma Inc. with a 12-month target price of HK$4.92, indicating a potential downside of 46.0% from the current price of HK$9.10 [6]. Core Insights - The management has outlined a clearer development strategy for ASC30, which includes both oral and subcutaneous formulations of GLP-1RA, with a focus on achieving more weight loss and better tolerability compared to competitors [2][5]. - The emergent metabolism pipeline includes ASC47 and ASC50, with key data readouts expected in the second half of 2025, which could unlock further value in the anti-obesity and broader metabolism franchise [5]. Summary by Sections ASC30 Development Strategy - The oral formulation of ASC30 has shown a competitive preliminary drug profile in safety and weight loss, positioning it among the top tier of oral GLP-1 drug candidates [2]. - The subcutaneous formulation of ASC30 has a 36-day half-life, allowing for potential monthly dosing, which is competitive compared to other long-acting candidates [2][5]. - Management plans to initiate a Phase 2a study for ASC30 with topline data expected by the end of 2025 [2]. Emergent Metabolic/Autoimmune Pipeline - ASC47, targeting lean mass maintenance while reducing fat mass, has begun a Phase 2a trial in combination with semaglutide, with data expected by Q4 2025 [5]. - ASC50, an oral small molecule targeting IL-17, has shown promising pharmacokinetic data and is currently in a Phase 1 study for plaque psoriasis, with results anticipated in Q1 2026 [5]. - ASC40 has completed a Phase 3 study in acne in China, and management plans to file for NMPA NDA in the next six months [5].

Investment Rating - The report assigns a Buy rating to Kelun Biotech with a 12-month price target of HK$284.14, indicating a downside potential of 12.6% from the current price of HK$325.00 [7]. Core Insights - The management of Kelun Biotech is shifting the focus of sac-TMT from China to global trials, highlighting the significant commitment from Merck (MRK) with 14 ongoing global phase 3 trials across various tumor types [5][6]. - The early-stage pipeline is progressing steadily, with notable developments in SKB315 and SKB410, and a focus on radio-drug conjugates (RDC) as a promising area of research [6]. - Key catalysts expected in the second half of 2025 include NMPA approvals and data readouts for sac-TMT and other assets, with projected sales ramp-up for sac-TMT aiming for RMB 800 million to 1 billion for FY25 [6]. Summary by Sections Sac-TMT Global Trials - Sac-TMT (TROP2 ADC) is entering a mature R&D stage in China with two approved indications and two under NDA, while five phase 3 trials are ongoing [5]. - The strategy involves leveraging global trials for smaller indications in China, which are deemed less appealing from a return on investment perspective [5]. Early-Stage Pipeline - The early-stage pipeline includes SKB315 (CLDN18.2) for gastric cancer and SKB410 (Nectin4), which is licensed to Merck, showing complementary effects compared to existing therapies [6]. - Several phase 1 assets are under dose-escalation without a data sharing plan for 2025 [6]. Radio-Drug Conjugates (RDC) - RDCs are highlighted for their potential in tumors with strong encapsulation, offering a more straightforward payload release mechanism compared to traditional methods [6]. - The management emphasizes the need for target-specific delivery mechanisms in RDC development [6]. Key Catalysts - Anticipated catalysts in 2H25 include NMPA approval for sac-TMT in 2L EGFRmut NSCLC, A166 (HER2 ADC) approval, and phase 1 data readout for SKB315 [6].

Investment Rating - The report assigns a "Buy" rating for Sino Biopharmaceutical with a 12-month price target of HK$3.92, indicating a downside potential of 24.1% from the current price of HK$5.17 [7][8]. Core Insights - The company is on track for double-digit year-on-year growth in product sales for the first half of the year, driven by strong performance in innovative drugs and a stable generic drug portfolio [3][6]. - A major business development deal is anticipated in the near term, which is expected to contribute to sustainable revenue through licensing and collaboration [2][3]. - The company has a robust R&D pipeline with several assets poised for global opportunities, including TQC3721, TQ05105, TQA2225, TQB3616, TQB2102, and TQB2922, among others [2][3]. Summary by Sections Product Sales and Growth - Management reported that product sales growth in the first half of the year aligns with previous guidance of double-digit year-on-year growth, supported by innovative drug sales and a positive trajectory in the generic drug portfolio [3][6]. - The company expects to benefit from volume gains in the context of the Value-Based Procurement (VBP) policy, which is anticipated to start at the provincial level in 2026 and nationwide by 2027 [3][6]. Business Development and R&D Pipeline - The company is preparing for a significant licensing-out deal, which is expected to enhance collaboration income as a sustainable revenue source [2][3]. - The R&D pipeline includes multiple assets with global potential, such as TQC3721, TQ05105, and TQA2225, which are in various stages of clinical development and show promising efficacy [2][3]. Financial Projections - The report forecasts revenue growth from HK$28.87 billion in 2024 to HK$37.42 billion by 2027, with EBITDA increasing from HK$6.33 billion to HK$9.42 billion over the same period [8]. - The company’s market capitalization is noted at HK$97.6 billion, with a P/E ratio projected to decrease from 27.2x in 2024 to 22.3x by 2027 [8].

Investment Rating - The report assigns a "Buy" rating to Zai Lab's H shares/ADS, with a 12-month DCF-based target price of HK$41.24/US$52.91, indicating an upside potential of 43.2% for the US shares and 39.8% for the HK shares [6][7]. Core Insights - Zai Lab management reiterated FY25 guidance, expecting total sales between US$560 million and US$590 million, with cash profitability anticipated in Q4 [5][6]. - The company has received FDA approval for the pivotal trial design for ZL-1310, which includes a sample size of 300-400 patients and an option for accelerated approval [6][7]. - Strong phase 3 data for bemarituzumab is expected within the next three months, with three key readouts anticipated [5][6]. Summary by Sections FY25 Guidance and Financial Outlook - Management observed a recovery in efgar sales in Q2 after a soft Q1, with confidence in achieving FY25 sales guidance [5]. - Gross Profit Margin (GPM) is expected to improve, with a target to reduce GPM by two-thirds by 2027 compared to 2024 [5]. Drug Development Updates - Positive feedback was received for SUL-DUR, with larger sales expected in 2026 [5]. - KarXT is on track for approval by the end of 2025 or early 2026, with recruitment for key commercial positions ongoing [5]. FDA and Business Development - The FDA has approved the pivotal trial design for ZL-1310, allowing for conditional approval based on interim data [6]. - Management indicated no immediate financing plans, stating sufficient resources to support the pivotal trial [6].

Investment Rating - The report assigns a "Buy" rating to key companies involved in the AI / AR glasses industry, including Xiaomi, Lenovo, and others [27]. Core Insights - The AI / AR glasses market is expected to grow significantly, with a projected CAGR of 56% from 2024 to 2030, reaching a total addressable market (TAM) of US$1 billion by 2030, equating to approximately 7 million units sold [3][12]. - The report highlights the increasing consumer interest in AI / AR glasses, driven by new product launches from major tech companies like Xiaomi, Meta, and Apple, as well as affordability and enhanced use cases [1][2]. - Xiaomi's recent product launch is anticipated to stimulate consumer interest and support the growth of the AI / AR glasses supply chain [2]. Market Forecasts - The report forecasts that AI glasses sales in China will reach 341,000 units by 2025, supported by new product launches and expanding use cases [3]. - The total shipments of AI / AR glasses in China are expected to grow from 365,000 units in 2023 to 894,000 units in 2025, with a strong growth trajectory continuing through 2030 [12][14]. Supply Chain Overview - Key companies in the AI / AR glasses supply chain include Will Semi, Lingyi, AAC, Largan, and major brands like Lenovo, Apple, and Xiaomi [4]. - The report outlines a robust pipeline of upcoming AI / AR glasses products from various companies, indicating a healthy competitive landscape [2][11]. Product Specifications - Xiaomi's AI glasses feature a 12MP camera, 8.6 hours of battery life, and are priced competitively between US$280 and US$419, comparable to other leading products in the market [8][9]. - The report provides a detailed comparison of specifications for various AI / AR glasses models, highlighting advancements in technology and features across different brands [9][11].

27 June 2025 | 11:24AM HKT China: Industrial profits fell notably in May; June PMI Preview Bottom line: China's industrial profits fell by 9.4% yoy, while revenue rose by 0.7% yoy in May (vs. +3.2% yoy and +2.6% yoy in April). In sequential terms, both industrial profits and revenue declined by 9.7% and 1.0% sa non-annualized, respectively, in May (vs. +4.0% and -0.6% in April). Key numbers: Industrial profits: -9.4% yoy in May (sequential growth: -9.7% non-annualized, seasonally adjusted by GS); April: +3. ...

28 June 2025 | 2:27PM HKT The PBOC held its Q2 MPC meeting on June 23rd and the statement was released on June 27th. Consistent with the Q1 monetary policy report, the PBOC maintained an easing bias but adopted a less dovish tone than in the Q1 MPC meeting minutes. The central bank assessed that the Chinese economy shows positive momentum with sustained sentiment improvement. Emphasizing the execution of existing policies, particularly targeted easing, signals limited appetite for significant easing in the ...