Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report highlights significant changes in futures positions among various market participants, indicating a shift towards flattener positions in the back end and steepener positions in the front end [5][22][19] - There were notable inflows in equities, particularly from private investors, with Japan and the Caribbean being the top Treasury buyers in June [1] - Large commercial banks saw an increase in deposits and cash assets, while their holdings in UST/Agency and MBS also rose [42] Summary by Sections CFTC Non-Commercial Futures Positions - Non-commercials removed $20.6 billion in the front end and added $5.6 billion in the back end, resulting in a total of $26.2 billion of a flattener position [5][9] - The breakdown of front-end positions included SOFR (-$2.4 billion), TU (-$2.1 billion), and FV (-$2.1 billion) [9] Traders in Financial Futures - Asset managers put on $8.8 billion of a steepener position, increasing their net longs in FV contracts to the highest level in six months [2][16] - Leveraged funds added $9.0 billion of a steepener position, increasing their net shorts in TY contracts to the highest level in six months [2][19] Primary Dealer Positions - Dealers added $2.7 billion in the front end and $22.3 billion in the back end, resulting in a total of $19.6 billion of a flattener position [22][26] - Dealers decreased their net shorts in TY contracts to the lowest level in six months [26] Large Commercial Bank Positions - Deposits increased by $45.7 billion, and cash assets rose by $6.3 billion, with UST/Agency holdings increasing by $18.0 billion and MBS holdings by $16.4 billion [42] Foreign Central Bank Positions - Foreign Central Bank UST holdings decreased by $16.9 billion, while Agency/MBS holdings decreased by $0.4 billion [47]

M Update Payments and Processing | North America August 26, 2024 12:39 PM GMT Stock Performance Review: V/ MA, PYPL, AFRM Morgan Stanley & Co. LLC James E Faucette Equity Analyst James.Faucette@morganstanley.com +1 212 296-5771 Shefali Tamaskar Research Associate Shefali.Tamaskar@morganstanley.com +1 212 761-4948 Meryl R Thomas, CFA Research Associate Meryl.Thomas@morganstanley.com +1 212 761-0774 Michael N Infante Equity Analyst Michael.Infante@morganstanley.com +1 212 761-4631 Antonio Jaramillo Research A ...

Investment Rating - The report upgrades the ratings for CITIC Securities H shares and East Money to Overweight (OW) and downgrades China International Capital Corporation H shares to Equal-weight (EW) [1][19]. Core Insights - The valuation of most major brokers has dropped to near historical lows due to increased uncertainty regarding future business and regulatory environments, alongside a rapid cooling of private equity and venture capital investments [1]. - The capital market has supported industrial financing and supply chain upgrades, but has resulted in disappointing investor returns, leading to a temporary tightening of capital markets and reduced visibility for brokerage businesses [1]. - A more diversified and inclusive IPO structure could enhance the quality of listed companies and investor returns, aiding the recovery of underwriting businesses [1]. - There are still alpha opportunities in the securities industry, particularly in companies that can benefit from the shift in capital market focus from financing to shareholder returns [1]. Summary by Company East Money (300059.SZ) - Rating upgraded to Overweight (OW) as its P/E ratio has compressed from approximately 13 times to only 3.7 times, presenting an attractive buying opportunity [1]. - The business model's replicability, cost efficiency, and potential for market share growth justify a valuation premium over traditional brokers [1]. CITIC Securities (6030.HK) - Rating upgraded to Overweight (OW) with an expected recovery in ROE leading the industry, projected to rise to 8.1% by 2025, potentially returning to double digits with improved market conditions [1]. - Anticipated dynamic P/B ratio recovery to 0.6-0.7 times, the highest among peers [1]. China International Capital Corporation (3908.HK) - Rating downgraded to Equal-weight (EW) due to various factors creating uncertainty around future ROE [1]. - The P/B ratio has fallen from approximately 0.6 times in Q4 2023 to 0.3 times, reflecting market concerns [1].

Morgan Stanley | RESEARCH July 30, 2024 04:09 AM GMT | --- | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------- ...