Investment Rating - The report indicates an optimistic outlook for China's manufacturing sector, with an increased forecast for export growth and a larger current account surplus expected by 2025 [3][69]. Core Insights - China's manufacturing sector remains the largest globally, with a significant trade surplus, driven by low production costs and strategic investments in high-tech sectors [4][6]. - Despite challenges such as US tariffs and global economic slowdowns, China's policymakers prioritize industrial growth over consumption [3][54]. - The report anticipates that real exports will be roughly flat in 2025, a revision from a previous forecast of a -5% decline, and expects a current account surplus of 2.3% of GDP in 2025 [3][69]. Summary by Sections Manufacturing Sector Overview - China's manufacturing ecosystem is characterized by low costs across production factors, including labor, capital, land, and energy, which collectively enhance competitiveness [19][22][26]. - The report highlights that China's labor costs remain significantly lower than those in developed markets, despite rising over the years [20][24]. Export Dynamics - China's exports are gaining market share in various sectors, particularly mid-to-high tech, while facing challenges in lower-tech sectors [14][15]. - The report notes that China's export success is attributed to a substantial competitiveness gap, especially in emerging markets [15][19]. Policy and Economic Strategy - The Chinese government continues to support "self-reliant" investment and innovation, particularly in high-tech sectors like electric vehicles, robotics, and semiconductors [46][48]. - The "Made in 2025" initiative and recent policy shifts emphasize technological advancement and reducing dependence on foreign supplies [52][53]. Current Account and Currency Outlook - The current account surplus is projected to strengthen, with expectations of a gradual appreciation of the renminbi against the US dollar [69][70]. - The report suggests that the undervaluation of the renminbi provides a competitive edge for exports, with forecasts indicating a shift towards a stronger currency in the coming year [70][71].

Investment Rating - The report indicates an upside risk to oil price forecasts due to recent trade de-escalation, estimating a potential increase of $3-4 per barrel to Brent/WTI oil price forecasts of $60/56 for the remainder of 2025 and $56/52 in 2026 [6][26]. Core Insights - The potential election of President Trump poses both upside risks to oil price volatility and downside risks to prices, primarily through impacts on oil demand from tariffs [5][26]. - Recent trade de-escalation has led to an estimated increase in global oil demand growth forecasts for 2025 and 2026 by 0.3 million barrels per day (mb/d) and 0.1 mb/d, respectively, raising demand growth to approximately 0.6 mb/d and 0.4 mb/d [6][26]. - President Trump's inferred preference for WTI oil prices is around $40-50 per barrel, with a tendency to call for lower prices when WTI exceeds $50 and for higher prices when below $30 [13][22]. Summary by Sections Section 1: Price Forecasts - The report estimates an upside risk of $3-4 per barrel to Brent/WTI oil price forecasts due to trade de-escalation and reduced recession risks [6][26]. - The expected global oil demand growth for 2025 and 2026 has been adjusted upwards due to improved GDP growth outlooks in the US, China, and Europe [6][26]. Section 2: Presidential Influence - President Trump's social media activity indicates a strong focus on energy markets, with nearly 900 posts related to energy since joining Twitter [8][22]. - The analysis reveals that Trump's posts about oil prices tend to increase as elections approach, reflecting his political strategy [8][22]. Section 3: Sanctions and Price Sensitivity - The report notes that Trump's propensity to post about oil sanctions decreases as prices rise, particularly when WTI is in the $60s or $70s, suggesting limited upside risks to prices from potential drops in sanctioned supply [22][26]. - The findings indicate that underinvestment and OPEC+ production quotas are more significant constraints on production volumes than sanctions [22][26].

Investment Rating - The report indicates a medium-term bearish outlook for USD/Asia currencies, suggesting a downward trajectory for the USD against Asian currencies [3][18]. Core Insights - The US-China trade talks resulted in a larger-than-expected reduction in tariffs, leading to a decrease in USD/CNY and an initial increase in other USD/Asia pairs [3][5]. - The US economics team revised their 2025 GDP growth forecast to 1.0% from 0.5% and reduced recession odds from 45% to 35%, which may limit the downside for the USD compared to a recession scenario [5][6]. - Key themes include ongoing diversification away from US assets, continued conversion of USD by Asian exporters into local currencies, and potential strength in Asian currencies if trade deals are reached [3][11][15]. Summary by Sections Changes Observed - The reduction in tariffs has led to a revision of USD/Asia forecasts, with expectations for USD/CNY to drift towards 7.0 [4][15]. - The US left-tail risk has decreased, improving the outlook for US assets and potentially reducing broad USD bearishness [5][18]. Unchanged Factors - The USD remains overvalued by approximately 17% according to the GS DEER model, indicating that the diversification theme away from US assets is still relevant [6][10]. - Asian exporters are expected to continue selling USD, with significant increases in foreign currency deposits in several Asian countries [11][9]. Implications for Asian FX - The report anticipates that if trade deals are finalized, Asian currencies will likely strengthen against the USD, with favored currencies being KRW, TWD, MYR, and SGD [3][18]. - The path of least resistance for USD/Asia is expected to be downward, especially if trade negotiations lead to a narrower trade deficit with the US [15][18].

Investment Rating - The report maintains a positive outlook on the consumer staples sector, with a preference for Beverage, Pet Foods, Dairy, and Beer categories, highlighting strong potential for margin expansion and shareholder returns [13]. Core Insights - Consumption demand is stabilizing, with 1Q25 showing 4% sales growth and 5% net profit growth, indicating a gradual recovery despite lingering deflationary pressures [1][2]. - Key themes for 2025 include margin resilience, unique product cycles, and a focus on shareholder returns, as companies navigate a challenging macro environment [1][2][13]. - The report identifies a divergence in performance among sub-sectors, with Food & Beverage and Pet Care sectors outperforming, while Condiments and Spirits lag behind [2][17]. Summary by Sections Market Overview - Retail demand recovery is gradual, with basic consumer goods seeing normalizing shipment and improving inventory cycles into 2Q25 [11]. - Value-focused trends persist, with economists projecting 0% CPI growth for 2025, leading to conservative average selling price trends across staples [11][12]. Competitive Landscape - Increased competition is expected in consumer sectors, particularly in beverages and snacks, with companies focusing on margin expansion through efficiency measures [9][15]. - Top players are outperforming, indicating a trend towards market consolidation, while smaller players may still find growth opportunities in niche markets [9][10]. Financial Performance - The staples sector is currently trading at an average forward P/E of 20x, with a projected earnings CAGR of 13% from 2025 to 2027 [2][13]. - Key stock picks for 2Q include Tingyi, CR Beverage, Eastroc, and Yanker, all of which are expected to benefit from strong product cycles and margin expansion [13][15]. Sector Preferences - The report emphasizes a preference for Beverage due to its secular growth potential, followed by Pet Foods, Dairy, and Beer, with specific stock recommendations for each category [13][17].

Investment Rating - The report initiates a Buy rating for WH Group with a 12-month target price (TP) of HK$8.6 per share, and a Neutral rating for Shuanghui with a TP of Rmb25.2 per share [4][25]. Core Insights - WH Group is the largest pork player globally, with a vertically integrated business model spanning hog production to packaged meat, and a significant presence in China, the US, and Europe [1][15]. - The company offers compelling shareholder returns with a dividend yield of 6%, one of the highest in the consumer staples sector, and potential share price upside of 26% [2][20]. - WH Group's operating profit (OP) is expected to grow at 6% year-on-year in 2025, driven by 4% growth in China, 7% in the US, and 10% in Europe, supported by favorable feed costs and ongoing operational efficiencies [2][24]. Summary by Sections Company Overview - WH Group operates a vertically integrated business model from hog production to packaged meat, with significant market shares in China (32% of sales), the US (53% of sales), and Europe (15% of sales) [1][15]. Financial Performance - The report anticipates WH Group's OP growth of 6% year-on-year in 2025, with specific growth rates of 4% in China, 7% in the US, and 10% in Europe, primarily due to stable hog prices and resilient packaged meat demand [2][24]. - The company is expected to maintain a strong cash flow, supporting its dividend payout ratio, with a forecasted free cash flow conversion rate of approximately 80% in 2026-27 [20][71]. Valuation - WH Group is valued attractively at 4x EV/EBITDA and 7x PE, with a potential re-rating opportunity as the US business stabilizes [3][25]. - The report highlights a significant valuation gap, with WH Group's current trading value reflecting only 40%-50% of the proportionate Smithfield Foods (SFD) market cap [3][27]. Market Dynamics - The report identifies three key themes affecting WH Group: the pork cycle, competition dynamics, and operating efficiency, with a focus on the company's leading market share and comprehensive product portfolio [16][17]. - Shuanghui, as the largest processed packaged meat player in China, is expected to maintain defensiveness amid pork cycles, with a track record of passing through inflation during hog upcycles [5][12]. Growth Outlook - The report projects a small decline in packaged meat OP in China, offset by growth in fresh meat OP, with expectations of breakeven in hog and poultry production [24][23]. - The US business is anticipated to recover from losses in 2024 to profits in 2025, while Europe is expected to see a 10% growth driven by acquisitions and favorable market conditions [24][25].

Investment Rating - The report raises the real GDP growth forecast for China to 4.6% in 2025 and 3.8% in 2026, up from previous estimates of 4.0% and 3.5% respectively [1][10][19] Core Insights - The US-China trade talks resulted in larger-than-expected tariff rollbacks, with US tariffs on Chinese goods dropping to 30% for an initial 90 days, significantly reducing the previous tariff burden [2][8] - The effective US tariff rate on China is estimated to be around 39%, down from 107% previously, while China's effective tariff rate on the US is around 30%, down from 144% [2][10] - The report anticipates that Chinese real exports will be roughly flat in 2025/26, a significant improvement from the previous forecast of a -5% annual decline [1][10] Summary by Sections Economic Impact - The report indicates that the tariff rollbacks will lead to a smaller drag on China's growth, resulting in less demand for domestic policy easing than previously expected [8][10] - The net export contribution to China's GDP growth is now expected to be +0.1 percentage points, compared to a previous expectation of -0.5 percentage points [10] Policy Adjustments - Monetary policy easing expectations have been adjusted to only one 10 basis point cut in Q4 2025, down from two cuts previously anticipated [1][10] - The augmented fiscal deficit estimate for China has been lowered to 13.0% of GDP for 2025, down from 13.5% [1][10][16] Growth Forecast Revisions - The report raises sequential growth forecasts for Q2 and H2 2025, resulting in a 0.9 percentage point increase on a Q4/Q4 basis [10][19] - The revised forecasts for China's GDP growth reflect a more stable outlook amid ongoing trade negotiations, with balanced risks primarily surrounding US-China trade relations [9][10]

Investment Rating - The report maintains a "Buy" rating for JD.com (JD/9618.HK) with a target price of US$50/HK$194, reflecting its attractive valuation compared to peers in the eCommerce sector [7][12][16]. Core Insights - JD Retail has shown strong profit growth, with a revenue acceleration across all categories, particularly in healthcare (+26% year-on-year) and general merchandise, making it one of the fastest-growing eCommerce platforms in China [1][2]. - The food delivery business has ramped up faster than expected, reaching nearly 20 million daily orders, which is about one-third of Meituan's food delivery volume [1][9]. - Despite the strong performance in JD Retail, the report anticipates a decline in JD Group's adjusted net profit by 9% year-on-year to Rmb43 billion for FY25 due to increased investments in food delivery [2][11]. Summary by Sections JD Retail Performance - JD Retail's revenue growth is projected at 14% for 2Q25 and 12% for FY25, driven by strong sales in electronics and appliances (+17% year-on-year) and general merchandise (+15% year-on-year) [10][11]. - The adjusted EBIT for JD Retail is expected to reach Rmb53 billion for FY25, reflecting a 26% year-on-year increase [1][11]. Food Delivery Business - The food delivery initiative has onboarded over 1 million merchants and is expected to incur losses of Rmb20 billion for FY25, up from previous estimates due to higher-than-expected order volumes [1][9]. - The report highlights the potential for cross-selling opportunities between food delivery and other JD Retail categories, which could enhance customer acquisition and retention [2][12]. Market Position and Valuation - JD's market share in the retail sector has increased significantly, with JD Retail's growth at 16%, nearly three times the industry average of 6% [15]. - The report emphasizes JD's unique business model combining first-party sales and a third-party marketplace, which positions it favorably against competitors [7][12]. Financial Estimates - Revenue estimates for JD Group have been raised by 2-3% for FY25-27, while adjusted net profit estimates have been revised down by 13% due to food delivery losses [11][38]. - The report projects a non-GAAP net margin of 3.3% for FY25, down from 4.0% previously, reflecting the impact of increased food delivery investments [11][38].

Investment Rating - The report maintains a consistent sector preference, favoring sports brands, diversified retailers, dairy, beverages, and restaurants, while being less favorable towards apparel/footwear OEM, furniture, projectors, discretionary small kitchen appliances, jewelry, and non-super-premium spirits [11]. Core Insights - Consumption in China has shown signs of recovery, with retail sales growth improving to +4.6% year-over-year in 1Q25, and companies in the coverage reporting an average growth of 14% compared to 12% in 4Q24 [1]. - Despite the positive growth, companies remain cautious about the outlook due to ongoing volatility and external factors such as US-China tariff developments impacting consumer confidence [2][1]. - Margin performance in 1Q25 was mixed, with some companies benefiting from favorable raw material prices and cost control, while others faced risks from marketing investments and competition [1]. - Companies are generally maintaining disciplined pricing strategies and healthier inventory levels, although some categories like spirits and sportswear are experiencing challenges due to demand pressures [1]. - The impact of tariffs on earnings and consumer sentiment is significant, with companies cautious about the second half of 2025 amid uncertainties [2]. Summary by Sections Key Findings from 1Q25 Results - Retail sales growth improved to +4.6% year-over-year, with coverage companies reporting an average growth of 14% [1]. - Labor Day consumption growth accelerated, indicating a potential rebound in consumer spending [1]. Expectations for 2Q25 - Companies are cautious about the outlook for 2H25 due to tariff uncertainties, although those with market share gain opportunities may be more resilient [2]. Sector/Stock Preferences - Preferred sectors include sports brands, diversified retailers, dairy, beverages, and restaurants, while least preferred sectors include apparel/footwear OEM and furniture [11]. Macro Data Points - The report notes that macroeconomic data points are solid, but ongoing tariff developments and policy support need to be monitored [11]. Valuation Methodology - The report emphasizes the importance of understanding the valuation methodology and the potential risks associated with it [11].

Dividend ETF Overview - Dividend ETFs in Taiwan have a total AUM of US$62 billion, representing 4.0% of the Taiwan ex-TSMC full float market cap[1] - The upcoming rebalancing period for these ETFs is crucial, occurring from May to June, which will influence stock flows and volatility[1] ETF Rebalancing Details - The 12 largest ETFs manage a combined US$60 billion in assets, with individual AUM ranging from US$400 million to US$14.1 billion[2][7] - Key rebalancing dates include review cut-off dates and effective dates, with significant changes expected in constituent stocks[10][18] Beneficiaries and Risks - A list of the top 50 beneficiaries of dividend ETF flows has been updated, focusing on stocks with high ETF ownership or those likely to be included in the rebalancing[3] - Stocks facing exclusion risks are identified, particularly those with declining dividend yields or weakened fundamentals[6] Stock Selection Criteria - Stocks are selected based on criteria such as liquidity, dividend yield, and market capitalization, with specific thresholds for inclusion in the ETFs[12][15][20] - The selection process includes a buffer zone for additions and exclusions, ensuring a structured approach to rebalancing[11][14][19]

Investment Rating - The report maintains a neutral investment rating across assets for a 12-month horizon, with a modest overweight to cash depending on risk tolerance [3]. Core Insights - The report highlights a shift towards a more neutral stance on risky assets following recent tariff de-escalation events and positive trade negotiations, which have led to a recovery in investor sentiment and positioning [1][2]. - The S&P 500 is projected to have a total return forecast of 0% over the next 3 months and 9% over the next 12 months, reflecting a less attractive asymmetry for equities in the current macroeconomic environment [6]. - The report emphasizes the importance of selective defensive overlay strategies, including protective option hedges, in light of the recent volatility reset [6]. Summary by Sections Economic Outlook - Recent tariff de-escalation events and trade agreements have positively influenced the US macroeconomic outlook, prompting economists to upgrade their baseline forecasts [1]. - The Federal Reserve has maintained the Fed Funds rate at 4.25-4.50%, despite rising uncertainty and weak Q1 GDP data [1]. Market Performance - US equities have shown mixed results, while the STOXX 600 has risen for four consecutive weeks, indicating a recovery in European markets [1]. - The VIX index has dropped below 20, marking its lowest level since early April, reflecting reduced market volatility [1][2]. Asset Allocation Recommendations - The report suggests a neutral stance on equities and bonds for the next 3 months, while maintaining an overweight position in cash and underweight in commodities to mitigate risk [6][23]. - Specific forecasts for major indices include a projected S&P 500 level of 5660, with a 12-month target of 6200, indicating a potential upside of 11% [23]. Currency and Commodity Insights - The US Dollar has weakened approximately 5% against other G10 currencies since February, while currencies like the Euro and Swiss Franc have appreciated [2][19]. - Commodity prices, including Brent and Copper, are projected to experience declines, with Brent expected to average $57 per barrel over the next 12 months [23].