Rate Decision Insights - The Federal Reserve's December FOMC minutes revealed a significant internal split, with a 9-3 vote to cut the federal funds rate by 25 basis points to a target range of 3.5%-3.75%[1] - The dissenting votes included two members advocating for no change and one member calling for a more aggressive 50 basis point cut[1] - The majority favored the rate cut due to increased downside risks to employment and stable inflation risks, suggesting further cuts may be appropriate if inflation trends downward[2] Economic Conditions - Overall PCE inflation and core PCE inflation both stood at 2.8%, with goods inflation influenced by tariffs and service inflation showing signs of moderation[2] - The unemployment rate increased slightly to 4.4%, indicating a softening labor market, while hiring activity remained weak[2] Market Expectations - Prior to the meeting, options markets anticipated a 25 basis point cut and projected two additional cuts in 2026[2] - Following the release of the minutes, equity markets experienced a slight decline, with traders increasing bets on a potential rate cut in April[4] Future Policy Guidance - All participants agreed that future policy decisions will depend on incoming data and evolving economic conditions, with no predetermined path[9] - The uncertainty surrounding the selection of the next Fed Chair adds additional variables to the Fed's independence and future policy direction[10]

Investment Rating - The report assigns an "Outperform" rating to multiple companies including Nike, Midea Group, JD Group, Haier Smart Home, Gree Electric, and others, while Lulu Lemon is rated as "Neutral" [1]. Core Insights - Duty-free sales have shown exceptional performance, driving growth in the discretionary sector, while Hong Kong consumer stocks have experienced significant declines [4][11]. - The luxury goods sector has outperformed, with a weekly increase of 1.5%, while the retail sector also saw a rise of 1.1% [5][13]. - The report highlights that the overall sentiment in travel-related sectors remains high, contributing positively to the discretionary consumption outlook [3]. Weekly Performance Review - The weekly performance of various sectors is as follows: luxury goods > retail > overseas sportswear > overseas cosmetics > US hotels > domestic sportswear > credit cards > snacks > pets > domestic cosmetics > gold and jewelry > gaming, with respective weekly changes of 1.5%, 1.1%, 0.8%, -0.3%, -0.4%, -2.4%, -2.4%, -2.8%, -2.9%, -4.5%, -4.6%, and -5.6% [11][12]. - The retail sector's growth was significantly driven by China Duty Free, which saw a 7.6% increase due to strong sales during the New Year holiday [6][13]. Monthly and Year-to-Date Performance - Monthly performance shows retail leading with a 4.9% increase, followed by overseas sportswear and US hotels, while domestic cosmetics and gaming sectors faced declines [11]. - Year-to-date performance indicates that overseas cosmetics and US hotels have performed well, while domestic cosmetics and snacks have shown negative growth [12]. Valuation Analysis - The report notes that the valuation of various sectors remains below their average over the past five years, with expected PE ratios for 2025 indicating significant potential for growth [9][14]. - Specific sectors such as overseas sportswear are projected to have a PE of 31.2 times, which is 59% of the past five-year average, while domestic sportswear is at 13.3 times, 70% of the average [14][15].

[Table_header2] 香港赌场和博彩 [Table_Title] 研究报告 Research Report 5 Jan 2026 香港赌场和博彩 Hong Kong Casinos & Gaming 12 月博彩毛收入环比下滑 0.9%，恢复至 2019 年的 91.5% Dec GGR Decreased 0.9% MoM, 91.5% of 2019 level [Table_summary] (Please see APPENDIX 1 for English summary) 澳门博彩监察协调局发布幸运博彩 12 月数据：连续三个月录得双位数增幅，澳门幸运博彩毛收入（GGR）同比增长 14.8%，恢复至 2019 年同期水平的 91.5%。2025 年 12 月，澳门博彩毛收入达 208.88 亿澳门元，同比增长 14.8%，环 比下滑 0.9%，恢复至 2019 年同期水平的 91.5%。12 月澳门日均 GGR 为 6.74 亿澳门元，较 11 月的 7.03 亿澳门元下滑 4.1%。12 月为传统的家庭游旺季，行业表现仍具韧性，延续 10 月及 11 月的强势增长。25Q3，澳门博彩毛 ...

Investment Focus - The report emphasizes prioritizing midstream dairy companies for consumer staples exposure in China, suggesting that this sector is expected to recover first in terms of performance and valuation [1][6]. Industry Overview - In December 2025, among the eight tracked essential consumer sectors, four showed positive growth while four experienced declines. The growing sectors included condiments, frozen foods, soft drinks, and dining, while the declining sectors were premium and mass-market baijiu, dairy products, and beer [3][9]. - The report indicates that the overall demand in most sectors remains subdued, with traditional categories like baijiu, beer, and dairy under pressure due to weakened consumer sentiment and competition from substitutes [3][9]. Price Trends - Baijiu wholesale prices mostly stabilized in December, with notable price changes for various brands. For instance, the price for Moutai (飞天) was reported at 1600 RMB for a full box, down 50 RMB from the previous month [4][22]. - Discounts on liquid milk and convenience foods increased significantly, reflecting a lack of demand, while discounts on condiments and soft drinks decreased [4][36]. Cost Analysis - The cost index for six categories of consumer goods showed mixed results in December, with soft drinks and instant noodles experiencing slight increases, while dairy products and beer saw modest declines [4][5]. - The prices of raw materials such as aluminum cans and paper increased year-on-year, impacting overall production costs [4]. Market Capitalization and Valuation - As of the end of December, net inflows into Hong Kong Stock Connect amounted to 20.825 billion RMB, with the consumer staples sector's market capitalization share rising to 5.61% [5]. - The report notes that the historical PE ratio for A-share food and beverage companies was at 16% (20.3x), indicating a decrease of 5 percentage points from the previous month [5]. Recommendations - The report suggests a two-pronged investment strategy for January: focusing on high-risk preference stocks like Luzhou Laojiao and Wuliangye, and on stocks with improving fundamentals and dividend yields such as Yili and Mengniu [6].

·········································································································[Table_Title] 研究报告 Research Report 5 Jan 2026 ```··························································································································································································································································· 东南亚可选消费必需消费 Southeast Asia Discretionary Staples 东南亚指数双周报第 15 期：集体拉升，越南领涨 ASEAN Index Tracking： Broad Rall ...

Investment Rating - The report does not explicitly state an investment rating for the automotive industry but indicates a challenging outlook for the market moving into 2026 due to increasing volatility and structural changes [7]. Core Insights - Major automakers reported December and full-year sales results, with a notable decline in the typical year-end "pull-forward" effect, leading to double-digit month-on-month declines for most OEMs [7][8]. - The fading demand driven by subsidies is expected to put sustained pressure on the automotive market in China, with a forecast of increased volatility and market restructuring [7][8]. - The divergence in target fulfillment among automakers reflects the alignment of corporate strategies with actual market demand, with some companies exceeding targets through effective segmentation and cost efficiency [16]. Summary by Relevant Sections December Sales Performance - BYD sold 420,000 units in December, an 18% year-on-year increase but a 13% month-on-month decline, achieving a full-year target of 4.602 million units [8][9]. - Geely's December sales reached 240,000 units, a 13% year-on-year increase but a 24% month-on-month decline, with a full-year target of 3.025 million units achieved [9]. - Leapmotor delivered 60,000 units in December, a 42% year-on-year increase, surpassing its annual target of 500,000 units ahead of schedule [10]. Strategic Positioning and Market Demand - Companies that effectively matched their strategic positioning with market demand were able to meet or exceed their sales targets, while others that relied heavily on specific products or technologies underperformed [16]. - NIO achieved a record 48,000 units in December, with a full-year delivery total of 326,000 units, reflecting a 74% target achievement rate [15]. - Xiaomi Auto exceeded 50,000 units in December for the first time, achieving over 400,000 units for the full year, aligning with its revised guidance [12]. Future Outlook - The report anticipates intensified competition in the electric vehicle segment, particularly for companies like Li Auto, which aims to maintain its leading position while facing uncertainties in its battery electric vehicle strategy [13]. - The overall market dynamics suggest that companies will need to adapt to changing consumer preferences and competitive pressures as they move into 2026 [16].

Investment Rating - The report maintains an "Outperform" rating for the following A-share targets: Jiangsu Heng Rui Medicine, Sichuan Kelun Pharmaceutical, Huadong Medicine, Jiangsu Nhwa Pharmaceutical, Xiamen Amoytop Biotech, Zhejiang Jingxin Pharmaceutical, Innovent Biologics, WuXi AppTec, Hangzhou Tigermed Consulting, Lepu Medical, MicroPort EP MedTech [5][36][8] - The report also maintains an "Outperform" rating for the following H-share targets: Hansoh Pharmaceutical Group, 3SBio, PATEO Biotech, Akeso, and related targets: Innovent Biologics, WuXi AppTec [8][36] Core Insights - The report continues to recommend the innovative drug and device industry and its supply chains, indicating a positive outlook for this sector [1][36] - In December 2025, the pharmaceutical sector underperformed the market, with the SW Pharmaceutical and Biological index falling by 4.1%, while the SHCOMP rose by 2.1%, ranking 26th among Shenwan primary industries [15][37] - The report highlights that the premium level of the pharmaceutical sector relative to all A-shares is currently at a normal level, with a relative premium rate of 63.2% as of the end of December 2025 [25][37] Summary by Sections A-Share Targets - The report includes a monthly portfolio of A-share targets that outperformed the pharmaceutical index, with a monthly average decline of 1.8% compared to the overall pharmaceutical index decline of 3.9% in December 2025 [11][36] - The top three stock gains in December 2025 were Luyan Pharma (+118.8%), CareRay Digital Medical Technology Co., Ltd. (+36.6%), and Hubei Hongyuan Pharmaceutical Technology Co., Ltd. (+34.0%) [24][37] H-Share Targets - The report notes that the Hong Kong stock pharmaceutical sector also underperformed the market, with the Hang Seng Healthcare index falling by 9.5% and the Hong Kong Biological Technology index falling by 10.6% in December 2025 [26][38] U.S. Market Performance - In December 2025, the U.S. pharmaceutical sector underperformed the market, with the S&P 500 Healthcare Select Sector declining by 1.5% while the S&P 500 fell by only 0.1% [26][39]

Investment Rating - The report maintains an "Outperform" rating for ZTO Express, J&T Global Express Limited, and S.F. Holding, indicating a positive outlook for the express delivery sector [7][63]. Core Insights - The express delivery sector is experiencing a recovery in profitability driven by anti-involution measures, with a recommendation to focus on leading companies such as ZTO Express and J&T Global Express Limited, which are showing high overseas growth [7][63]. - The report highlights that the volume growth of express deliveries has slowed to single digits in Q4 2025, with a year-on-year increase of 5% in November 2025, reflecting a trend of maintaining single-digit growth [9][63]. - The anti-involution measures have effectively improved average selling prices (ASP) and profitability across the industry, with notable increases in single ticket revenue for major companies [9][63]. Summary by Sections Investment Advice - The report continues to be optimistic about the express delivery sector, recommending ZTO Express, J&T Global Express Limited, and S.F. Holding as key players to watch [7][63]. Industry Volume and Pricing - Q4 2025 saw express delivery volume growth drop to single digits, with the industry achieving a total of 180.6 billion parcels in November, marking a 5% year-on-year increase [9][63]. - The average single ticket revenue for the express delivery industry was 7.62 RMB in November 2025, reflecting an 8.3% decline year-on-year but a 1.9% increase month-on-month [19][63]. - The report notes that the share of intercity express delivery continues to rise, while the share of same-city delivery has decreased slightly [23][24]. Company Performance - S.F. Holding's volume growth outpaced its peers, with a year-on-year increase of 20.13% in November 2025, while other major companies like YTO and Yunda also showed positive growth [35][36]. - The report indicates that profitability is recovering across major companies, with net profit margins for ZTO, YTO, Yunda, and Shentong showing improvements in Q3 2025 [46][63]. Long-term Outlook - The report suggests that the express delivery industry is moving towards healthy competition, with leading companies expected to continue to rise in prominence due to their pricing power and market leadership [50][57].

Investment Rating - The report recommends focusing on the cyclical turning points in the pig and beef farming sectors, highlighting companies like Muyuan Foods and WH Group as potential investments. The pet industry shows clear growth potential, with companies that integrate production, sales, and research expected to succeed, such as Zhongchong Co., Guibao Pet, and Petty Co. The planting sector also has significant growth potential, with recommendations for companies like Morning Light Bio and Noposion [11]. Core Insights - The pig farming sector is expected to face continued low prices in the first half of 2026, driven by both policy and cyclical factors, with a focus on cost improvement and growth potential in pig farming enterprises [2][15]. - The poultry sector is experiencing a recovery phase, with white chicken prices remaining low and yellow chicken demand potentially increasing due to promotional activities [3][37]. - The beef farming sector is characterized by a long production cycle, with supply-side contractions likely to drive prices upward, particularly from 2025 onwards [4][46]. - The feed and animal health sectors are expected to see growth in sales, with a focus on the competitive landscape and the impact of low profits on animal health demand [5][63]. - The planting sector is projected to see stable grain prices, driven by domestic control and innovation, with a focus on specialty crops and plant extracts [6][69]. Summary by Sections Pig Farming - Prices are expected to remain low in the first half of 2026, with a gradual increase in supply due to rising breeding sow inventories [15]. - Capacity policies and cyclical adjustments are leading to a continued reduction in production capacity, with a focus on cost reduction and debt management among pig farming companies [23][27]. - Companies like Muyuan Foods are highlighted for their cost improvements, with expectations of further reductions in production costs [29]. Poultry Farming - The white chicken industry is in a deep price slump, with recovery expected to take time, while yellow chicken prices may see slight recovery due to promotional efforts [32][37]. - Leading companies are improving their operational efficiencies to cope with low prices, which may enhance their performance when prices recover [33]. Beef Farming - The long production cycle and fragmented market structure of beef farming in China are significant factors, with supply reductions expected to lead to price increases starting in 2025 [41][46]. - The beef supply is projected to decrease in the latter half of 2025, with expectations of continued price increases through 2027 [47]. Feed and Animal Health - The feed sector is expected to see a recovery in sales, with high inventory levels in the livestock sector supporting growth [52]. - The animal health sector may face pressure due to low profits in the livestock sector, but there are opportunities for breakthroughs in key products [63][65]. Planting - Grain prices are expected to stabilize and rise, with a focus on domestic production and innovation in seed varieties [69][75]. - The planting sector is seeing a shift towards high-quality, innovative seed varieties, with companies like Kangnong Seed showing strong growth potential [87].

Investment Rating - The report indicates a stable market outlook for the real estate industry in 2026, with expectations of continued policy support [1][13]. Core Insights - Last week, real estate transactions in major cities showed mixed results, with policies remaining stable, which is expected to support a steady market in 2026 [1][13]. - New home sales in 30 major cities reached 3.15 million square meters in the first week of 2026, reflecting a 5.2% increase from the previous week but a 20.6% decrease year-on-year [14]. - First-tier cities saw a significant increase in sales, with 710,000 square meters sold, up 31.0% week-on-week but down 24% year-on-year [14]. - Second-tier cities sold 1.98 million square meters, up 2.83% from the previous week, down 15% year-on-year [14]. - Third-tier cities experienced a decline in sales, with 470,000 square meters sold, down 12.3% week-on-week and down 34.5% year-on-year [14]. - Cumulative sales in 30 cities as of January 1, 2026, were 90,000 square meters, down 61.8% from December 2025 [14]. - Second-hand home sales in 24 cities fell to 2.04 million square meters, down 7.50% from the previous week and down 14.5% year-on-year [15]. - The land transaction growth in 100 cities continued to decline, with land supply at 10.28 million square meters and transactions at 33.30 million square meters, resulting in a supply-to-sales ratio of 0.31 [16]. - The cumulative land supply in 100 cities was down 27% year-on-year, with cumulative transaction growth down 24.8% year-on-year [16]. - The inventory clearance cycle in 35 cities rose to 24.54 months, indicating a longer time required to clear existing inventory [17].