Group 1 - Standard Chartered Group has announced the launch of spot trading services for Bitcoin (XBT/USD) and Ethereum (XET/USD) through its UK branch, becoming the first global systemically important bank to offer such services [1] - Major global systemically important banks (G-SIBs) including Citigroup, JPMorgan, Morgan Stanley, and others are actively engaging in the cryptocurrency sector, with JPMorgan recently introducing a stablecoin-like token named JPMD for institutional clients [1][2] - The U.S. Congress has passed three bills related to stablecoins and cryptocurrencies, indicating a move towards more favorable regulatory policies for the cryptocurrency market [3] Group 2 - European banks such as UBS, Deutsche Bank, and HSBC are also entering the cryptocurrency space, with UBS successfully piloting a blockchain-based cross-border payment solution and Société Générale issuing a euro-based stablecoin [4] - Several international banks are forming partnerships with Chinese institutions, with HSBC launching a tokenized deposit management solution in Hong Kong and Deutsche Bank collaborating with Ant Group to explore tokenized deposits and stablecoin solutions [4] - The establishment of more platforms and subsidiaries by major banks aims to build a cryptocurrency ecosystem, with JPMorgan, Citigroup, and Société Générale creating dedicated digital asset platforms [5] Group 3 - The behavior of stablecoin users is seen as a threat to traditional banking operations, as businesses increasingly prefer to hold stablecoins for payments and liquidity management, which could weaken banks' control over funds [6] - Banks are responding by seeking to create "tokenized deposits" to enhance liquidity and customer engagement while maintaining regulatory compliance [6]

Core Viewpoint - China's GDP grew by 5.3% year-on-year in the first half of the year, with strong performance in consumption, exports, and industrial production, leading several international investment banks to raise their economic growth forecasts for China in 2025 [1] Group 1: Economic Growth and Forecasts - UBS raised its 2025 GDP growth forecast for China from 4% to 4.7%, citing a robust second-quarter GDP growth of 5.2% supported by "trade-in" subsidies and stable export growth [1] - Morgan Stanley increased its 2025 GDP growth forecast from 4.5% to 4.8%, highlighting export resilience and proactive fiscal measures as key growth drivers [1] - Nomura maintained its GDP growth predictions for the second half of this year and 2026 but slightly adjusted its 2025 forecast upward due to better-than-expected second-quarter GDP growth [4] Group 2: Export Performance and Policy Support - The report indicated that exports outperformed expectations due to factors like "export grabbing" towards the U.S., ASEAN transshipment, and the depreciation of the yuan against non-dollar currencies [2] - Barclays Bank anticipates increased government efforts to boost consumption in the second half, including expanding the "trade-in" policy to more categories and potentially extending subsidies to additional service sectors [4] - UBS expects additional stimulus measures to be introduced by the government in late Q3 or Q4, including an increase in the fiscal deficit ratio by over 0.5 percentage points and interest rate cuts of 20-30 basis points [4] Group 3: Economic Challenges Ahead - Morgan Stanley noted that economic growth is expected to slow further in the second half, with weakening exports becoming a major drag on growth due to the fading "export grabbing" effect and renewed U.S. tariff policies [5] - The marginal effectiveness of fiscal stimulus is expected to diminish, and the impact of the "trade-in" policy on consumption will gradually decline [5] - A stimulus package of approximately 0.5 to 1 trillion yuan may be introduced, with timing potentially in September or October, allowing policymakers to assess economic trends more accurately [5]

Economic Growth Predictions - Multiple foreign institutions have raised their GDP growth forecasts for China in 2025, with Morgan Stanley increasing its prediction from 4.5% to 4.8%, Goldman Sachs from 4.6% to 4.7%, and UBS from 4% to 4.7% [1][4] - At least nine U.S. and international banks have adjusted their forecasts for China's economic growth, with Barclays and Morgan Stanley predicting nearly 5% growth for this year [2] Economic Indicators - China's GDP grew by 5.3% year-on-year in the first half of 2025, with industrial output increasing by 6.4%, and high-tech manufacturing growing by 8.7% [3] - Retail sales increased by 5.0% year-on-year, reflecting a 0.4 percentage point acceleration from the first quarter [3] Chip Export Developments - AMD plans to resume exports of its MI308 chip to China following U.S. government approval, marking a significant shift in U.S. policy regarding AI chip exports to China [7] - The approval of H20 chip exports to China is expected to enhance Nvidia's profitability and indicates progress in U.S.-China trade negotiations [8] Market Sentiment - Optimism regarding China's economic growth is improving investment expectations in the Chinese stock market, with Citigroup upgrading its rating on the consumer sector from "neutral" to "overweight" [5] - Bridgewater's onshore China fund achieved a 14% return in the first half of the year, reflecting a positive outlook on Chinese equities due to policy support and relatively low valuations [5]

Group 1 - Recent research by Invesco indicates a notable rebound in interest from international investment institutions towards the Chinese market, with 83 sovereign wealth funds and 58 central banks managing approximately $27 trillion in assets [1] - Multiple foreign institutions express optimism regarding Chinese assets due to the steady improvement in the Chinese economy, ongoing policy benefits, and enhanced corporate profit outlooks [1][2] - UBS and Deutsche Bank have raised their GDP growth forecasts for China in 2025, reflecting a positive sentiment towards the economic growth prospects [2] Group 2 - The structural improvement in profitability and returns of Chinese assets has led several institutions to have a favorable outlook on A-shares, with expectations of a gradual recovery in earnings throughout the year [2] - Goldman Sachs highlights that if listed companies allocate 10% of total cash expenditures to dividends or buybacks, it could enhance company valuations by 14% [2] - HSBC's Chief Investment Officer for Asia expresses optimism regarding Chinese tech stocks, particularly due to breakthroughs in AI technology that are expected to drive demand [3] Group 3 - International investment banks are demonstrating their confidence in Chinese assets through significant investments, such as a $50 million mandate from a German pension fund to invest in Chinese assets [4] - Data from Wind shows an increase in northbound capital holdings, with a market value of 2.29 trillion yuan as of June 30, reflecting a 2.38% increase from the previous quarter [4] - Several foreign private equity firms have registered as fund managers in China, indicating a commitment to deepening their market presence [4] Group 4 - Upcoming policies aimed at enhancing foreign participation in the Chinese capital market are anticipated, including tax incentives for foreign investors reinvesting profits in China [6] - The introduction of ETF options trading for qualified foreign institutional investors (QFII/RQFII) is expected to provide more trading tools and improve market liquidity [6] - The development of RMB foreign exchange futures is projected to enhance risk management for financial institutions and businesses, boosting confidence in holding RMB assets [7]

知识星球:水木调研纪要 关注公众号:水木纪要 Global Research 14 July 2025 China Equity Strategy How will a weaker dollar impact A-shares and AH premium ? Four structural reasons why the dollar could continue to weaken UBS forecasts the dollar to continue to weaken this year, and has set its 2025 year-end target for EUR/USD and USD/JPY at 1.23 and 130, respectively. In addition to ുറ്റു വ slowdown in US GDP growth and Fed rate cuts, UBS foresees four other structural reasons why the dollar should depreciate further. (1) Net forei ...

Investment Rating - The report upgrades the 2025 full-year GDP growth forecast to 4.7% from 4% previously projected [5][54]. Core Insights - Robust Q2 GDP growth of 5.2% YoY was supported by better retail sales and solid exports, despite ongoing property downturn and decelerating fixed asset investment (FAI) growth [2][9]. - The property downturn is expected to continue in H2 2025, impacting construction activities and consumer confidence [3][34]. - Additional policy stimulus is anticipated to be modest and data-dependent, with expectations of a fiscal stimulus of >0.5% of GDP in H2 [4][42]. Summary by Sections Economic Growth - Q2 GDP growth was 5.2% YoY, slightly lower than Q1's 5.4% [7][9]. - Industrial production growth edged down to 6.2% YoY in Q2 from 6.5% in Q1, while service value-added growth improved [9][15]. - The report anticipates a deceleration in economic growth in H2, particularly in Q4, with expected GDP growth of 4.7% YoY in Q3 and below 4% YoY in Q4 [5][54]. Exports and Trade - China's exports grew by 6.2% YoY in Q2, with a revised full-year export growth forecast of 1% for 2025 [3][29]. - Exports to the US are expected to decline deeper in H2 due to tariff shocks and front-loading effects [3][29]. - The report notes that global demand for Chinese goods outside the US appears better than expected, with strong growth in exports to ASEAN and EU [26][29]. Fixed Asset Investment - FAI growth decelerated to 2.1% YoY in Q2 from 4.2% in Q1, with property investment contracting by -12.1% [13][54]. - Equipment purchases remained strong, contributing positively to overall FAI growth [13][19]. Consumption - Retail sales growth moderated to 4.8% YoY in June from 6.4% in May, with expectations of decelerating consumption growth in H2 due to high base effects from trade-in subsidies [11][35]. - The report highlights that household disposable income growth may slow, impacting consumption without fiscal subsidies [35][54]. Policy Stimulus - The government is expected to deliver additional fiscal stimulus in H2, but the scale is likely to be modest at >0.5% of GDP [4][42]. - The People's Bank of China (PBC) is anticipated to cut policy rates by another 20-30 basis points in H2 [4][42]. Currency Outlook - The report suggests that the Chinese Yuan (CNY) may strengthen in the near term but could weaken towards the end of 2025, with expectations of a range of 7.0-7.3 against the US dollar in H2 [56][54].

Core Viewpoint - UBS expects the euro to rise against the US dollar, predicting it will reach 1.23 by June 2026, up from a previous forecast of 1.20 [1] Summary by Relevant Sections - **Currency Forecast** - UBS has raised its euro to dollar exchange rate forecast for June 2026 to 1.23, an increase from the previous expectation of 1.20 [1] - The forecast for the end of 2025 has also been adjusted upward to 1.21 from an earlier prediction of 1.16 [1] - **Investment Strategy** - The firm highlights the euro as a key alternative currency for global investors looking to diversify away from the US dollar [1] - UBS describes the euro as the "default" alternative choice for these investors [1]

Group 1 - UBS expresses caution regarding the outlook for U.S. consumers and the economy, anticipating significant pressure on risk appetite in financial markets due to new tariffs and inflationary pressures [1][2][3] - The firm predicts a decline in U.S. GDP growth to approximately 1% in 2025, influenced by delayed fiscal stimulus and a cautious consumer environment [2][3] - UBS highlights rising loan delinquency rates and weakened consumer spending intentions, indicating tightening credit conditions and increased potential credit risks [1][3][17] Group 2 - The macroeconomic environment is unfavorable for consumers, with slowing economic growth and a projected unemployment rate of about 4.6% in 2025 [3][4] - UBS forecasts core PCE inflation to remain around 3.4% by the end of 2025, contributing to sustained high interest rates that will burden household debt repayment [4][9] - The impact of increased tariffs is expected to erode consumer purchasing power, with 68% of respondents indicating inflation negatively affects their economic outlook [9][16] Group 3 - UBS recommends a defensive investment strategy, focusing on high-quality, cash-flow stable companies and essential consumer goods, while avoiding high-debt and cyclical sectors [21][22] - The firm identifies a "trade-down" trend among consumers, benefiting large discount retailers like Walmart and Costco, which dominate U.S. retail spending [22] - UBS emphasizes the importance of monitoring credit cycles, as rising delinquency rates in student loans and mortgages signal increasing financial pressure on consumers [17][21]

Group 1 - Morgan Stanley, Goldman Sachs, and UBS suggest that gold is one of the best investment options following the recent tariff announcements by the Trump administration [1] - Morgan Stanley's analysts expect a weaker dollar to benefit commodities and rising US inflation to attract funds into precious metals, with Chinese policies potentially acting as a bullish factor [1][2] - Morgan Stanley has raised its fourth-quarter gold price target to $3,800 per ounce, citing support from central bank and investment demand, a weaker dollar, ETF inflows, and ongoing geopolitical and macroeconomic uncertainties [3] Group 2 - Goldman Sachs reaffirms its forecast that gold prices will reach $3,700 per ounce by the end of the year and rise to $4,000 by mid-2026, supported by central bank and ETF inflows [3][4] - UBS recommends buying gold as a hedge against policy risks, despite viewing the recent tariff increases as a negotiation tactic [4] - UBS analysts predict that the effective US tariff rate will stabilize around 15%, which is less than the recently announced rates of 30% to 35%, supporting continued gains in the S&P 500 [4]

Core Viewpoint - UBS has raised its GDP growth forecast for China in 2025, citing strong performance in Q2 2023 and expected government support measures [1] Economic Performance - China's GDP grew by 5.2% year-on-year in Q2 2023, indicating robust economic performance [1] - The growth was supported by improved retail sales due to "trade-in" subsidies and steady export growth [1] Government Policy Expectations - The government is expected to implement the remaining parts of the annual broad fiscal plan in the second half of the year, including planned trade-in subsidies [1] - A reduction in policy interest rates by 20 to 30 basis points is anticipated in the second half of the year, along with additional measures to promote real estate inventory reduction [1] Future Projections - Additional policy support measures may depend on economic data, with new fiscal policies potentially being introduced by the end of Q3 or in Q4 [1] - Overall, the GDP growth forecast for 2025 has been revised upward due to strong export resilience, low base effects from trade-in subsidy policies, early issuance of government bonds, and planned policy support measures [1] Inflation and Currency Outlook - CPI pressure is expected to rise slightly in the second half of the year, while the RMB may strengthen in the short term [1] - External uncertainties could lead to the RMB/USD exchange rate reaching 7.1 to 7.2 by the end of 2025 [1]