Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The growth signal from US soft data has improved, indicating a better trade policy outlook [2][4] - The Current Activity Indicator (CAI) for the US shows a value of +1.6% for May, reflecting a positive trend in economic activity [14][50] - The global CAI has ticked up to +2.3% in May, suggesting a recovery in economic conditions [14][50] - Emerging markets, particularly India, show strong growth signals with a CAI of +7.6% in April [14][50] Summary by Sections Economic Indicators - The report highlights improvements in soft data indicators, particularly in the US, which are expected to positively influence economic growth [2][4] - The Financial Conditions Index (FCI) has eased, primarily due to short-term interest rates, indicating a more favorable financial environment for growth [9][28] Current Activity Indicator (CAI) - The CAI for various regions shows positive growth signals, with the US at +1.6% and global CAI at +2.3% for May [14][50] - Developed markets show a CAI of +1.0%, while emerging markets are significantly higher at +4.1% [14][50] GDP Forecasts - The report indicates a change in GDP forecasts for 2025, with notable increases for India and the US, reflecting stronger economic performance [12][97] - The global GDP forecast has been adjusted, with a focus on emerging markets showing resilience and growth potential [12][97] Inflation and Wage Trends - Wage trackers indicate underlying wage growth across G10 economies, which may influence inflation dynamics [22][69] - The report discusses trimmed core inflation measures, which provide insights into underlying price pressures in the economy [62][94]

Investment Rating - The report recommends positive optimal allocations to both gold and enhanced oil futures in long-run portfolios as strategic hedges, as they have historically helped to reduce portfolio risk [4][60]. Core Insights - The report concludes that positive long-run allocations to gold and enhanced oil futures are optimal for investors seeking to minimize risk or tail losses for a given return [2][10]. - Gold serves as a hedge against losses in central bank and fiscal credibility, while oil protects against negative supply shocks [2][10]. - The report suggests a higher-than-usual allocation to gold and a lower-than-usual allocation to oil in long-term portfolios [2][10]. Summary by Sections Strategic Case for Gold and Oil - Investors are seeking protection for equity-bond portfolios due to recent failures of US bonds to protect against equity downside and rising US borrowing costs [2][7]. - Historical data indicates that during any 12-month period when real returns for both stocks and bonds were negative, either oil or gold has provided positive real returns [9][14]. Recommendations for Long-Term Portfolios - The report recommends overweighting gold due to high risks to US institutional credibility and sustained central bank demand [44][54]. - It advises underweighting oil because of high spare capacity and reduced risk of shortages in 2025-2026, while still maintaining a positive allocation to oil for potential tail risks [54][59]. Tactical vs. Strategic Positioning - For tactical positioning over shorter horizons (0-2 years), the report recommends going long on gold and using oil puts or put spreads to hedge against recession risks [59][60]. - For strategic hedging over long horizons (5+ years), it emphasizes the importance of gold to protect against shocks to US institutional credibility and suggests a balanced approach to oil [59][60].

Investment Rating - The report assigns a "Buy" rating to Meituan with a 12-month price target of HK$172, indicating an upside potential of 30.9% from the current price of HK$131.40 [13]. Core Insights - Meituan is focused on defending its leadership in the food delivery market while expanding its Instashopping and Keeta initiatives internationally. The company anticipates a stabilization in the competitive landscape as subsidy levels rationalize over time [7][11]. - The report forecasts a 9% growth in order volume for Q2 2025 and an 8% growth for FY 2025, driven by industry-wide subsidies, although it expects a significant decline in food delivery EBIT due to increased user subsidies [7]. - Instashopping is projected to achieve a 27% growth in order volume for Q2 2025, with a long-term outlook of becoming a key driver for on-demand growth and local commerce profits [7]. - Keeta's expansion is gaining momentum, particularly in Saudi Arabia, with plans to enter Brazil contingent on infrastructure development. The report anticipates losses for Keeta but improving unit economics [7][11]. Summary by Sections Food Delivery Market - Meituan aims to maintain its GTV market share leadership by focusing on core user retention and diverse meal offerings. The company expects a 33% decline in food delivery EBIT for 2025 due to increased subsidies [7]. - The average daily order volume for food delivery is projected to grow from 70 million in 2024 to 77 million in 2025, with a slight decline in average order value [10]. Instashopping Growth - Instashopping is expected to see strong growth, with a projected GTV of Rmb 344 billion by 2025, reflecting a 24% year-on-year increase. The average daily order volume is anticipated to rise to 12.1 million [10]. - The report highlights that Instashopping's profitability is improving, with a small operating loss expected in Q2 2025 due to investments in marketing for shopping festivals [7]. Keeta Expansion - Keeta is experiencing strong growth in Saudi Arabia, with future expansion into Brazil dependent on infrastructure readiness. The report forecasts a loss of Rmb 10.4 billion for FY 2025 primarily due to Keeta's increased losses [7][11]. Financial Projections - Group revenue is projected to grow from Rmb 337.6 billion in 2024 to Rmb 382.5 billion in 2025, with a gross profit margin expected to stabilize around 38.4% [10]. - The report estimates adjusted EBIT for 2025 to be Rmb 30.5 billion, reflecting a decline from the previous year due to increased investments and subsidies [10].

Investment Rating - The report indicates a solid outlook for US power demand, with a year-over-year growth rate of 3.9% projected for 1Q2025, compared to a historical average of 1.0% over the past two decades [5]. Core Insights - US power demand growth remains robust despite macroeconomic uncertainties, with both bottom-up and top-down analyses supporting this conclusion [5]. - The average/median year-over-year growth rate for power sales in the US for 1Q2025 is reported at 2.0%/1.8%, adjusted for weather and leap-year effects [5]. - The report highlights that the differences between top-down and bottom-up approaches are primarily due to the sample of power suppliers covered, which represents approximately 25-30% of overall US power sales [9]. Summary by Sections - **Bottom-Up Analysis**: The bottom-up approach shows an average/median growth rate of 2.0%/1.8% for 1Q2025 power sales, adjusted for weather and leap-year effects, based on earnings reports from US power utilities [5]. - **Top-Down Analysis**: The top-down approach indicates a year-over-year growth rate of 3.9% for total US power demand in 1Q2025, significantly higher than the historical average [5]. - **Utility Performance**: Utilities under coverage reported that 1Q demand was mostly in line with their annual guidance, with specific companies like XEL and WEC expecting continued demand growth aligned with their forecasts [9].

Investment Rating - The report does not explicitly provide an investment rating for the oil industry but discusses expectations regarding OPEC+ production decisions and market dynamics, indicating a cautious outlook on oil prices [1][4]. Core Insights - Crude oil prices have decreased week-on-week ahead of the OPEC+ meeting, with expectations of a final production increase of 411 thousand barrels per day (kb/d) in July [1]. - The report highlights that OPEC+ is likely to maintain production levels flat after July due to anticipated new shale projects entering the market and economic growth deceleration [1]. - Geopolitical factors, including US-Iran nuclear talks and sanctions on Russia, have had mixed effects on oil prices [2]. - Brazil's new FPSO Alexandre de Gusmão and Norway's production exceeding expectations have contributed negatively to price outlooks [3]. - Trackable net supply has increased by 0.1 million barrels per day (mb/d), driven by higher production from Russia and lower demand from China [4][15]. Supply Dynamics - OPEC8+ crude and condensate exports are currently 0.4 mb/d above May 1st levels, reflecting a rise in exports coinciding with increased production quotas [14]. - Russia's liquids production nowcast has risen to 10.6 mb/d, while US Lower 48 crude production is estimated at 11.2 mb/d [15][23]. - China's oil demand has decreased by 0.1 mb/d to 16.7 mb/d, indicating a potential slowdown in consumption [15][33]. Demand Trends - Global oil demand remains resilient, with Saudi domestic oil demand increasing by 0.1 mb/d year-over-year in April [6]. - OECD Europe oil demand has edged up by 0.1 mb/d to 13.3 mb/d week-over-week, suggesting a slight recovery in consumption [15][34]. - The report notes that China’s propane imports from the US are down by 0.2 mb/d, reflecting ongoing tariff uncertainties [14][68]. Inventory and Pricing - OECD commercial stocks have increased by 7 million barrels (mb) to 2,782 mb, indicating a build in inventories [42]. - Global commercial stocks have also risen by 18 mb, reflecting a broader trend of increasing oil supplies [15][42]. - The Brent timespread has normalized, with the gap narrowing to 8 percentage points (pp) from its fair value [53]. Geopolitical and Market Positioning - Geopolitical developments, including sanctions on Russia and the situation in Venezuela, continue to influence market dynamics [2][70]. - The long-to-short oil ratio stands at the 57th percentile, indicating a relatively balanced positioning in the market [74].

Investment Rating - The report maintains a cautious outlook on the solar industry, expecting significant capacity cuts and a decline in capital expenditures, leading to a weaker pricing outlook and flattened profitability curve [4]. Core Insights - The profitability for solar value chain segments is likely to fall below pre-rush installation levels in May, with cash profitability expected to deteriorate to average levels seen in Q1 2025 [2][4]. - A rapid decline in upstream pricing is observed due to weaker demand and aggressive low-pricing strategies by Tier 2-3 players, impacting the overall market dynamics [2][19]. - Proactive price stabilization efforts by leading players are crucial to monitor in June, as inventory pressures are expected to continue increasing [2][14]. Summary by Sections Pricing Trends - As of May 15, 2025, spot prices for Poly/Wafer/Cell/Module/Glass/Film/Inverter in China showed average declines of -2%/-14%/-3%/-3%/-6%/-3% MTD, and -8%/-17%/-7%/-2%/+8%/+1% compared to pre-rush installation levels [2][19][20]. - Glass prices appear more resilient compared to other segments, primarily due to lower inventory days [20]. Profitability Metrics - Spot price implied cash gross profit margins (GPM) for various segments showed significant declines, with Tier 1 cash GPM for Poly/Wafer/Cell/Module/Glass/Film averaging flat/-13pp/+1pp/-4pp/-3pp/flat MTD [10]. - Monthly average cash profitability in May is likely to deteriorate to levels seen in Q1 2025, indicating a challenging environment for the industry [2][7]. Production and Inventory Dynamics - Production volumes are expected to decline by an average of 4% month-over-month in May, with specific declines in Poly/Wafer/Cell/Module [12]. - Inventory days are likely to rebound to an average of 30 days in May from 25 days in April, indicating a higher production-to-demand ratio [13][15]. Future Outlook - The report anticipates deeper solar capital expenditure declines of -55% year-over-year in 2025, with lower capacity utilization rates expected [4]. - Continued supply increases for Glass are projected, which may lead to a rapid inventory restock and a potential price cut to Rmb12/sqm in Q3 2025 [3][14].

Investment Rating - The report maintains a "Buy" rating on Horizon Robotics, reflecting a positive outlook on the smart driving sector driven by the AD/ADAS trend in China [2]. Core Insights - The report highlights that Black Sesame (2533.HK) is positioned to benefit from the growing demand for AD/ADAS technologies in China, with management targeting double-digit revenue growth in 2025 [1][7]. - The competitive landscape indicates that car OEMs are likely to continue diversifying their chipset suppliers, which will favor companies like Black Sesame and Horizon Robotics that provide advanced automotive chipsets [2][8]. Summary by Sections 2025 Outlook - Black Sesame's A1000 SoC will be featured in Dongfeng's new model, the eπ 007, which boasts 58 TOPS computing power and over 20 smart driving assistance functions, including highway NOA navigation and long-range autonomous parking assistance [4]. Competition Dynamics - Management believes that developing chipsets in-house is challenging for car OEMs due to the time and cost involved, which positions Black Sesame favorably in the market [8]. - The company collaborates with third-party software suppliers to enhance its algorithm development, providing flexibility for customers in choosing software solutions [8]. Company Profile - Black Sesame specializes in AD/ADAS SoCs, offering a range of products such as the A1000 series and Wudang series, which are already adopted by major OEMs like Geely and Dongfeng [3].

Global Markets Daily: Dollar Depreciation—Repatriation Not Required (Cahill/Kanter) Dollar Depreciation—Repatriation Not Required The Dollar is overvalued, and we think it has further to fall. In currency markets, valuation is not a catalyst because it is not a very strong anchor; there are no underlying cash flows like coupon payments or dividends. Instead, when we think of valuation we use it as a starting point for analysis—why is the currency over- or under-valued, and are those forces likely to shift o ...

USA: FOMC Minutes Note Committee Is "Well Positioned to Wait for More Clarity" BOTTOM LINE: The minutes to the FOMC's May meeting noted that FOMC participants believed the Committee was "well positioned to wait for more clarity" on the economic outlook, given "solid" economic growth and a "moderately restrictive" monetary policy stance. "Almost all" participants saw a risk that "inflation could prove to be more persistent than expected." At the same time, the Fed staff judged that a recession was "almost as ...

Investment Rating - The report maintains a bullish outlook on stocks related to Reliability of Power/Water/Energy, Efficiency of Energy/Resources/Land, and solutions for Aging Populations/labor strains [1][15][38] Core Insights - Sustainable funds with broader APAC regional mandates have outperformed non-ESG peers for six consecutive quarters, while those with individual country mandates have struggled [1][35] - Performance is deemed more critical than policy for the growth of Sustainable Investing's AUM penetration, with a focus on quality and governance [1][13] - The report highlights a notable increase in AUM penetration for ANZ-focused Sustainable funds, reaching 4.8% by 1Q25, up 23 basis points year-over-year [12] APAC Fund Performance and Flows - APAC-focused Sustainable equity AUM remained flat at US$212 billion, with minor outflows of -US$0.9 billion in 1Q25, primarily from Japan and Emerging Markets-focused funds [9][19] - Passive Sustainable strategies now represent 52% of total APAC-focused Sustainable AUM, attracting US$1.0 billion of inflows in 1Q25 [9][19] - Sustainable funds in the top two quintiles based on 3-year risk-adjusted returns saw cumulative inflows of +US$6.0 billion in 2024, contrasting with -US$16 billion outflows in the bottom cohort [10][12] Stock Ideas - New entrants into the E&S Leaders screen include companies like JYP Entertainment, Kweichow Moutai, and Tata Consultancy, all rated as Buy by Goldman Sachs [6][7] - Thematic stock in focus includes Harmonic Drive Systems, which aligns with Green Capex and Aging Populations Solutions themes [6] Sustainable Fund Trends - The report notes that the median performance of APAC-focused Sustainable funds was at the 45th percentile in 1Q25, indicating underperformance relative to peers [35][42] - Greater China-focused Sustainable funds have shown significant impact on median performance, comprising approximately 50% of the funds tracked [36][44] - The report emphasizes a less-is-more approach to Sustainable integration strategies, focusing on measurable metrics [38]