In 2024, the pet food market grew 8.5% YoY in terms of retail sales, according to the Pet Industry White Paper, showing its strong resilience amid the sluggish economy. Domestic brands have outgrown foreign brands on sales growth with local brand obtaining increasing recognition. Looking ahead, we expect the demographic changes (ageing population and declining new birth rate) to boost the penetration of pet ownership and local brands to outperform imported brands due to consumers' rising confidence in local ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **oil and gas industry**, specifically analyzing the **Brent crude oil market** and **non-OPEC supply dynamics** for 2025 and beyond [6][28][39]. Core Insights and Arguments - **Oil Market Surplus**: A surplus of approximately **0.7 million barrels per day (mb/d)** is expected in 2025, which will likely keep Brent prices around **$70 per barrel** [6][72]. - **Oil Demand Growth**: Projected oil demand growth for 2025 is around **1.0 mb/d**, which is at the lower end of the consensus range. Factors affecting this include below-trend global GDP growth, slowing population growth, and pressure on demand from China [6][12]. - **Non-OPEC Supply Increase**: Non-OPEC supply is expected to re-accelerate to **1.4 mb/d** in 2025, up from **0.9 mb/d** in 2024, driven by new projects in various countries [6][28]. - **OPEC Production Growth**: OPEC production is anticipated to grow by only **0.3 mb/d** in 2025, which includes **0.1 mb/d** from natural gas liquids (NGLs) and condensate [6][72]. - **Market Risks**: Key uncertainties include potential extensions of OPEC cuts, possible lower production from Iran, and risks to demand from tariffs [6][72]. Demand Dynamics - **Global Seaborne Energy Imports**: Growth in global seaborne energy imports halted in 2024, with a notable decline in crude import demand in Europe [7]. - **China's Demand Decline**: China's oil demand has decreased year-on-year for the past seven months, which is significant as China has historically accounted for half of global oil demand growth [15]. - **Refined Products Demand**: Demand for refined products is expected to grow by approximately **600 kb/d** year-on-year in 2025, but the market is currently trading in a weak seasonal period [12][14]. Non-OPEC Supply Insights - **Supply Growth Stagnation**: Non-OPEC supply has experienced stagnation over the last 12 months after a significant acceleration post-2022 price spikes [21][22]. - **Production Forecasts**: For 2025, consensus estimates suggest non-OPEC crude and condensate supply will re-accelerate to about **1.2 mb/d** [28][36]. - **Investment Trends**: Capital expenditures (capex) in the oil sector have recovered to over **$500 billion**, with attractive internal rates of return (IRRs) projected for upcoming projects [39][42]. OPEC Supply Dynamics - **Production Cuts**: OPEC has significantly lowered its future production plans, with output expected to grow again from April 2025 onwards [47][54]. - **Adherence to Quotas**: Various OPEC countries are showing differing levels of adherence to their production quotas, impacting overall supply [48][51]. Additional Important Insights - **Break-even Prices**: The median break-even oil price in US shale remains below **$50 per barrel**, indicating a wide distribution of costs among producers [45]. - **Market Balance**: The total oil liquids balance indicates a **0.7 mb/d surplus** in 2025, with potential for further tightening if OPEC+ cuts are extended [72]. This summary encapsulates the critical insights and projections regarding the oil market, demand dynamics, and supply forecasts, providing a comprehensive overview of the current state and future expectations within the industry.

6 January 2025 THIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINA China Rates 2025 Fixed Income Just how low can bond yields go? China China government bonds (CGBs) performed very well in December, delivering almost 2% in fixed income returns. The strong performance of CGBs may have caught some investors off guard as based on our tracking of EM local currency bond funds, portfolio managers were, on average, 3ppt underweight CGBs at the end of November. Continued economic uncertainty alongside the PBoC's ...

Summary of the Coal Industry Update Industry Overview - The report focuses on the **China Coal Industry** and provides insights into the thermal and coking coal markets in the Asia Pacific region [1][7]. Key Points and Arguments Price Movements - **Thermal Coal Prices**: - QHD 5500 thermal coal price decreased by **0.3% week-over-week (WoW)** to **Rmb 707/ton** as of January 3, 2025 [2][8]. - CCI 5500 increased by **0.7% WoW** to **Rmb 770/ton** [2][8]. - BSPI remained flat at **Rmb 703/ton** [2][8]. - Seaborne thermal coal price (NEWC) fell by **3.1% WoW** to **US$ 124/ton** [2][8]. Inventory Levels - **Coal Inventory**: - QHD port inventory decreased by **1.8% WoW** to **6.45 million tons (mt)** [3][8]. - Bohai Rim ports' inventory dropped by **5.2% WoW** to **25.1 mt** [3][8]. - Major Independent Power Producers (IPPs) coal inventory increased to **15.8 days**, up from **15.6 days** the previous week [3][8]. Production Insights - **November Coal Production**: - Set a new record at **428 million tons (mnt)**, representing a **3.4% year-over-year (YoY)** increase and a **3.9% month-over-month (MoM)** increase [4][8]. - Power generation demand was mild, increasing by only **2.5% YoY** to **750 billion kWh** in November [4][8]. Coking Coal Prices - **Coking Coal Prices**: - Liulin No. 4 mine-mouth price decreased by **2.9% WoW** to **Rmb 680/ton**, while the Free on Rail (FOR) price remained flat at **Rmb 1,410/ton** [3][8]. - Queensland (QLD) coking coal price increased by **0.5% WoW** to **US$ 206/ton** [3][8]. Market Outlook - The report indicates a cautious outlook for the coal industry, emphasizing the central government's commitment to treating coal as a strategic reserve, which may allow for further production increases in the future [4][7]. Additional Important Information - The report includes various data points and charts illustrating coal prices, inventory levels, and production trends, which provide a comprehensive view of the current state of the coal market in China [5][6][8]. - The report also highlights the potential impact of weather conditions on coal demand and production, particularly during the heating season [1][7]. This summary encapsulates the critical insights from the coal industry update, focusing on price movements, inventory levels, production records, and market outlook.

ab 6 January 2025 Global Research China Industrials Going global: 'China+1' investment plan tracker (2024) UBS's quarterly tracker gauging 'China+1' progress under going global Our China 'going global' tracker follows the country's progress under the China+1 strategy on a quarterly basis (from Q124). In Q424, the overseas investment intentions for LatAm and ASEAN changed—investment plans in ASEAN increased notably in Q424 while investment interest in LatAm continued to decline YoY. We continue to expect goi ...

Industry or Company Involved - **China's Economy** Key Points and Arguments 1. **China's Economic Outlook in 2025 hinges on two factors: external tariffs and domestic stimulus**. The US tariffs are expected to phase in from 25Q2 and increase by 15% in a staged manner, impacting China's exports and GDP. Domestic policy is expected to become more expansionary, but not a decisive shift from the current real-growth-targeting and reactive easing mode. 2. **Tariff Risks**: The baseline assumption is a 15% annualized increase in tariffs, similar to the 2018-19 trade dispute. The US has indicated a desire to strengthen oversight on tariff evasion, but implementation may be challenging due to China's dominant role in global manufacturing. 3. **Trade Diversion**: The US has indicated a desire to strengthen oversight on tariff evasion, and we do anticipate meaningful measures to close such "loopholes" through third countries and a crackdown on de minimis shipments. Implementation, however, may prove challenging, given China's dominant role in global manufacturing. 4. **Impact of Tariffs**: A 15% tariff hike with partial diversion will slow China's exports by -6.0% and China's GDP by –1.0% ceteris paribus. 5. **RMB Depreciation**: The RMB depreciation pressure is real under tariff threats. Amid trade dispute 1.0, USDCNY responded to almost every announcement of tariffs and deals. Based on this sensitivity, USDCNY could reach 7.7-8.0 under 60% tariffs, and in the escalating stage, the markets could price in extreme scenarios. 6. **Confidence Problem**: Two years after reopening, social confidence is still weak. The confidence issue appears broad-based and entrenched now. Weak sentiment would continue to weigh on the economy in 2025. 7. **Deflation Challenge**: China's longest streak of deflation drags on. The GDP deflator should remain negative in 24Q4E, the seventh consecutive negative reading. This is unprecedented for China, with a similar episode only in 1998-99. 8. **Policies**: China should and probably will navigate the turbulence with policy stimulus. The support would step up to offset potential tariff shocks, but not to reflate the economy. 9. **Monetary Easing**: Rate and RRR cuts will likely continue. The monetary policy stance is now officially stated as "moderately loose" by the Politburo and the CEWC. 10. **Fiscal Policy**: We expect overall government deficit to increase ~RMB2.5tr to RMB11.5trn for 2025. The central government could take up all the increase. 11. **Targeted Consumer Support**: Targeted consumer support would likely top policymakers' priority list for 2025. Following the recent pay hikes for civil servants, more mini measures could come through. 12. **GDP Growth**: We maintain our forecast that GDP growth could retreat to 4.2%YoY in 2025E after hitting 5.0% in 2024E. 13. **Inflation**: China may not find an easy way out of deflation in 2025E. We forecast CPI to average 0.6%YoY and PPI to decline -1.9%YoY in 2025E – no reflation. 14. **Consumption**: Retail sales could grow only 3.5%YoY in 2024E, setting the stage for rebound. Indeed, household savings rate stood at 38.0% in 24Q1-3, still notably higher than the pre-Covid 36.2%. 15. **Investment**: Property investment could record a fourth high single-digit or double-digit contraction in 2025. Policymakers are aiming for "stopping the decline of the sector and foster a stabilization," yet we think it is more about home prices and sales, instead of investment. 16. **Trade**: Exports look set to decline from the all-time high amid tariff uncertainties. Headline exports likely grew 5.4%YoY in 2024 with the momentum for volume even stronger. 17. **Key Risks**: The shock could be more significant especially in the case of a 60% universal tariff on China. Our current expectations are at best an educated guess, and we see risks largely balanced around this base case.

January 6, 2025 04:06 PM GMT PDD Holdings Inc | Asia Pacific Temu Progress Check: 12/24 Key Takeaways Exhibit 1: Number of countries that Temu has entered (fully entrusted model) Exhibit 2: Number of countries that Temu entered (semi-entrusted model) 1 0 3 18 25 1 8 15 11 7 0 5 10 15 20 25 30 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 4Q24 # of countries that Temu entered (fully-entrusted model) Source: Temu website, Morgan Stanley Research Exhibit 3: Temu's monthly downloads 0 10 20 30 40 50 60 70 Sep-22 ...

Summary of the Conference Call on China Property & Property Management Industry Overview - **Industry**: China Property & Property Management - **Outlook for 2025**: Destocking to persist with five key themes identified for the year [2][9] Key Themes for 2025 1. **Existing Homes' Share Gains**: The trend of existing homes gaining market share from new homes is expected to continue, driven by buyer concerns over project quality and completion risks [2][19] 2. **Rising Importance of Rental Market**: The rental market is becoming increasingly significant, with a shift from buying to renting properties, impacting rental prices and government inventory buyback programs [2][24][26] 3. **Challenges for Luxury Malls**: Luxury malls are anticipated to face ongoing challenges due to a mismatch between supply and demand, with luxury retail sales declining by approximately 10% in 2024 [2][29][31] 4. **C-REITs as a Rising Asset Class**: The decline in interest rates is expected to benefit C-REITs, with a notable increase in their average unit price by 12% in 2024 [2][33][37] 5. **Diminishing Policy Impact**: The influence of government policies on the physical and stock markets is expected to decrease, with a focus shifting towards individual company fundamentals [2][3] Market Performance and Expectations - **2024 Performance**: MSCI China Real Estate declined by 11%, underperforming MSCI China by 26 percentage points [3][14] - **2025 Expectations**: Anticipated declines in the residential new home market with projected YoY declines of 10% in GFA sales and new starts, and a 10% decline in tier-1 cities' property prices [2][18] Stock Preferences - **Preferred Stocks**: BEKE and CR Land are favored due to their structural advantages in the current market environment [4] - **Cautious Stance**: A cautious outlook on developers and managers due to ongoing price and volume stabilization issues, with increased default risks highlighted [4] Valuation Metrics - **Current Valuation**: MSCI China Real Estate is trading at a forward PE of 8.4x and P/BV of 0.60x, compared to historical averages of 6.7x and 0.87x [5][9] Additional Insights - **Secondary Market Growth**: Secondary transactions increased to 47% of total transactions in 2024, up from 30% in 2022, indicating a shift in market dynamics [21] - **Rental Yield vs. Mortgage Rates**: Rental yields in tier-1 cities remain lower than mortgage rates, affecting investment decisions [25][26] - **Luxury Market Outlook**: Anticipated decline in domestic luxury spending by 8% YoY in 2025, with luxury brands expected to slow store expansions [30][31] Conclusion The conference call highlighted a challenging outlook for the China property market in 2025, with significant shifts towards existing home transactions and the rental market, alongside persistent challenges for luxury retail spaces. The anticipated decline in property prices and the evolving landscape of C-REITs present both risks and opportunities for investors in this sector.