Investment Rating - The report suggests that the asset revaluation pricing model is suitable for the current macroeconomic environment in China, indicating a positive outlook for investment in this context [3][4]. Core Insights - The report emphasizes that the asset revaluation pricing model is more effective in a low-growth macroeconomic environment, drawing parallels with Japan's market experience [3][4]. - It recommends a shift in focus from net profit growth to asset revaluation growth, particularly for mature industry leaders [4][9]. - The report identifies three key sectors for investment: financial stocks, large-cap stocks, and companies with strong CAPEX and cash return capabilities [3][4]. Summary by Sections Asset Revaluation Pricing - The asset revaluation pricing model is deemed more appropriate for the future performance of A-shares as the Chinese economy transitions to stable growth [4][13]. - The model focuses on retained earnings growth and its impact on net asset value, which is more relevant in a low-growth environment [9][10]. Effectiveness of Asset Revaluation Strategy - The report highlights that the explanatory power of asset revaluation growth for industry performance has increased, making it a more effective fundamental indicator than net profit growth [19][22]. - In 2024, only three industries showed a failure in this logic, indicating a strong correlation between asset revaluation growth and stock price movements [19][22]. Financial Sector Insights - The financial sector is expected to see a broader revaluation beyond just banks, with non-bank financial institutions also having significant revaluation potential [29][33]. - The report notes that the asset revaluation growth for financial stocks is significantly higher than for non-financial sectors, driven by their lower dividend payout ratios [29][33]. Market Trends and Economic Outlook - The report discusses the ongoing market style shifts influenced by economic growth and policy expectations, suggesting a long-term trend towards stability in financial performance [19][22]. - It predicts that the Chinese economy will maintain a growth rate above the global average, despite challenges in the real estate sector and fiscal stimulus [14][15].

Investment Rating - The report indicates a new 20% tariff on Vietnam's exports to the US, which is a reduction from the previous reciprocal tariff rate of 46% but still significantly higher than the pre-Liberation Day rate of 4.6% [2][3] Core Insights - The US-Vietnam trade deal aims to establish favorable rules of origin and reduce transshipment, which could lead to higher tariffs for other ASEAN economies like Thailand while potentially benefiting India with lower tariffs [2][3][20] - Vietnam's exports to the US account for 29.5% of its total exports and 25.1% of its GDP, indicating a significant economic impact from the new tariff structure [5][6] - The indirect effects of the US tariffs on Vietnam will also impact other Asian economies that supply intermediate products, with Vietnam's exposure estimated at 8.25% of its GDP, while Thailand, Taiwan, and South Korea face lower but still significant impacts [6][7] Summary by Sections Trade Deal Details - The US and Vietnam have agreed on a 20% tariff on Vietnam's exports, which includes various products such as tech, footwear, and agricultural commodities [2][3] - Vietnam is expected to address non-tariff barriers and provide preferential market access for US agricultural products [2][3] Economic Impact - The total export value at risk due to the new tariffs is estimated at 1.7% of Vietnam's GDP, with Taiwan at 0.9%, China at 0.8%, and Thailand and Korea at 0.6-0.7% [7][6] - The report highlights that the higher tariffs will pressure profit margins for exporters and may lead to increased prices for end consumers [5][6] Regional Dynamics - The transshipment clause poses challenges for ASEAN economies, particularly Thailand and Cambodia, which may face higher reciprocal tariff rates [3][20] - The report suggests that India could gain a competitive advantage in sectors like textiles and electronics if it can negotiate lower tariffs [3][20]

Investment Rating - The report maintains a high conviction level on several currency pairs, including short CNH against an equal-weighted basket (EUR, AUD, KRW) at 4/5, long EUR/INR at 4/5, and long USD/HKD outright at 4/5 [6][10][16] Core Insights - The report suggests a bias towards a weaker USD, despite some short-term headwinds from stronger-than-expected US nonfarm payroll data [8][12] - Key focus points include potential changes in US trade agreements and the influence of Fed Chair Powell's position on USD strength [11][20] - The report highlights the importance of monitoring developments in US tariffs, particularly concerning Japan and other major trading partners [19][20] Summary by Sections Asia FX Strategy - The conviction level on short CNH against an equal-weighted basket has been raised to 4/5, targeting a 4% return by the end of July [11] - Long EUR/INR is favored with a conviction level of 4/5, driven by RBI's bias to maintain FX reserves and local growth slowdown [17] - Short USD/TWD is maintained at a high conviction level of 4/5, with expectations of continued foreign equity inflows and robust local fundamentals [15] G10 FX Strategy - Long EUR/GBP is retained at a conviction level of 4/5 due to fiscal pressures on GBP and potential for further deterioration in economic data [21] - Short USD/JPY recommendations are maintained, with expectations of downward pressure on USD against JPY amid rising tariff risks [19][20] - The report indicates a modestly positive outlook for AUD, with expectations of a rate cut from the RBA [22] Asia Rates Strategy - Conviction on pay 10y HK IRS is raised to 4/5 due to increased HKMA intervention and expectations of upward pressure on USD/HKD forwards [25] - The conviction on pay 5y outright in China is maintained at 4/5, while the conviction on 2s5s steepener is reduced to 3/5 [26] - In India, a 2y NDOIS receive position is maintained, with limited near-term catalysts expected [27]

Investment Rating - The report indicates a strong investment potential in the new tea beverage industry, particularly in overseas markets, highlighting the rapid growth of companies like Mixue Ice City and BaWangChaJi [1][2]. Core Insights - The tea beverage industry has evolved through three main stages: industrialized products, gradual diversification of raw materials, and a mature phase where consumers demand high-quality ingredients [4]. - The overseas market presents significant growth opportunities, with Mixue Ice City achieving a staggering 900% and 175% year-on-year revenue growth in 2022 and 2023, respectively [2][3]. - Different regions exhibit varying acceptance levels for Chinese tea brands, necessitating tailored strategies for market entry and expansion [5][6]. Summary by Sections Industry Development Stages - The tea beverage industry has undergone three key phases over the past 30 years: dominance of industrialized products, slow diversification of raw materials, and a current phase characterized by high consumer expectations for quality [4]. Regional Market Dynamics - Southeast Asia offers vast potential due to its tropical climate and youthful demographic, while Japan and South Korea require adaptations to cater to aging populations and seasonal preferences [5][11]. - The North American and European markets present both challenges and opportunities, with a need to expand consumer awareness beyond the Asian demographic [13]. Strategic Approaches for Expansion - Companies are adopting three main strategies: large-scale expansion in Southeast Asia, refined operations in Japan and South Korea, and premium positioning in North America and Europe [6][9]. - The supply chain is crucial for successful overseas expansion, requiring local sourcing and global procurement strategies [14][15]. Local Adaptation Strategies - Chinese tea brands are implementing localization strategies, including partnerships with local firms and adjusting pricing to fit local income levels [17][18]. - The pricing strategy varies significantly across regions, with brands like Mixue Ice City focusing on affordability in Southeast Asia while premium brands target higher-income consumers in Japan and South Korea [18]. Future Trends - The future of the tea beverage industry is expected to be driven by health-conscious trends and global expansion, with a focus on diverse consumer demands and supply chain efficiency [19][20].

Investment Rating - The report initiates coverage of K&S (KLIC US) with a Buy rating, and BE Semiconductor (BESI NA) with a Neutral rating, while maintaining a Buy rating on ASMPT (522 HK) [3][6][11]. Core Insights - Advanced packaging (AP) is expected to evolve significantly from 2025 onwards, with a shift from CoWoS-S to CoWoS-L/R, increased adoption of SoIC driven by HBM5, and potential upgrades in InFO technology led by Apple [3][6]. - The semiconductor cycle's recovery is a key catalyst for K&S and ASMPT, given their substantial sales exposure to conventional packaging [3][6]. CoWoS Technology - CoWoS technology is transitioning from CoWoS-S to CoWoS-L, with TSMC expected to increase its CoWoS-L capacity from approximately 20% in 2024 to nearly 60% in 2025 [7][21]. - CoWoS-S is anticipated to face oversupply due to non-TSMC supply chain expansions, while CoWoS-L is expected to be in demand for high-end GPUs [7][28]. SoIC Technology - SoIC is projected to gain importance with the adoption of high-NA EUV technology, although headwinds are expected in 2025 due to limited new adopters and potential capex constraints from Intel [8][14]. - AMD is currently the major adopter of SoIC, with potential future demand driven by Apple and HBM technologies [8][14]. InFO Technology - Apple is likely to adopt upgraded InFO technology from 2026 onwards, necessitating capacity upgrades to accommodate new application processor designs [9][20]. - The transition from InFO-PoP to InFO-M is expected as the I/O count between DRAM and application processors becomes insufficient [9][20]. Company-Specific Insights - K&S is positioned to be the primary TCB supplier for TSMC's on-wafer process starting in 2025, benefiting from the shift towards CoWoS-L technology [3][6]. - ASMPT is expected to gain market share in the HBM market from a low base, with its TCB potentially adopted by TSMC and Apple in the future [3][6]. - BE Semiconductor faces challenges due to rich valuations and potentially disappointing hybrid bonding orders in 2025 [3][6].

Global memorv EQUITY: MEMORY Upside potential remains solid into 2027F, thanks to Al Commodity DRAM/NAND: strong 1H25F and weak 4Q25F – shipment and ASP growth in 2Q25F likely higher than expected due to pull-in demand in anticipation of a tariff hike For 2Q25, we had pencilled in 10-20% q-q growth in both DRAM and NAND shipments. However, we now believe that actual shipment growth could turn out to be higher than our previous expectation ([company guidance] DRAM: SEC and Hynix 10-12% q-q; NAND: SEC 15% q-q ...

Investment Rating - The report maintains a high conviction level on several currency trades, including short USD/TWD and long EUR/INR, both rated at 4/5 [5][9][11]. Core Insights - The report emphasizes a weaker USD trend supported by geopolitical developments, particularly the de-escalation of tensions between the US and Iran, which is expected to strengthen the softer USD theme [3][5]. - There is a notable shift in US portfolio allocation, with signs of slowing inflows into US equities and bonds, indicating potential reallocation into other global markets [7]. - The report highlights the importance of upcoming US labor market data, particularly the June nonfarm payrolls, which could significantly impact USD movements [7][20]. Summary by Sections Asia FX Strategy - The conviction level for short USD/TWD has been raised to 4/5, with a target of 27.0 by mid-July, reflecting strong foreign equity inflows and limited scope for the CBC to intervene [9][11]. - Long EUR/INR position has its target increased to 103, supported by the RBI's FX bias and expected continued foreign inflows [11][12]. - The report maintains a long USD/HKD position, anticipating continued HKD liquidity withdrawal by the HKMA [13]. G10 FX Strategy - Long EUR/GBP is maintained with a target of 0.8750 by end-October, driven by sticky inflation in the Eurozone and a weaker USD [20][24]. - Short USD/JPY is recommended, targeting 136 by end-September, as the risk of major JPY weakness has subsided [19][24]. - Long NZD/CAD is positioned with a target of 0.8520 by end-September, supported by improved global sentiment and a weaker USD [22][23]. Asia Rates Strategy - High conviction is maintained for pay 5y China NDIRS, expecting higher long-end rates due to anticipated stimulus measures from Beijing [25]. - In India, a 2y NDOIS receive position is maintained, with expectations for INR rates to trade in a narrow range due to recent RBI actions [26]. - The report suggests exiting pay Sep-IMM 5y NDIRS in Korea, as market pricing may be low relative to expected growth and fiscal policy [27].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Long-term interest rates have risen or remained elevated in many countries, with China being a notable exception where rates have fallen to a historic low of 1.6% [3][38] - The rise in long-term rates in Japan, the US, and Europe is attributed to a combination of factors, including the shift from quantitative easing (QE) to quantitative tightening (QT) and persistent private-sector financial surpluses [13][17] - The report highlights that the current economic conditions in China resemble Japan's post-bubble period, indicating a balance sheet recession where the private sector is focused on deleveraging rather than borrowing [43][76] Summary by Sections Long-term Interest Rates - Long-term interest rates in Japan and the US have reached their highest levels in over a decade, while China's rates have declined significantly [2][3] - The increase in long-term rates is seen as an inevitable consequence of the transition from QE to QT, which has led to a tightening of monetary policy [16][15] Balance Sheet Recession - The report discusses the concept of a balance sheet recession, where the private sector focuses on saving and debt repayment, leading to a lack of borrowing and spending [10][44] - In Japan, the balance sheet recession began after the asset bubble burst in 1990, while in the US and Europe, it started in 2008 [4][49] Private Sector Financial Surplus - The private sector in Japan, the US, and Europe continues to run financial surpluses, which have remained stable even after 2022 [17][24] - The latest data shows the US private-sector financial surplus at 7.31% of GDP, while the eurozone's surplus stands at 6.35% of GDP [23][24] China's Economic Situation - China's current long-term interest rates signal a need for additional fiscal stimulus, as the economy is in a balance sheet recession similar to Japan's in the 1990s [45][43] - The report suggests that the Chinese government should focus on public works projects to effectively utilize excess savings and stimulate the economy [46][59] Structural Reforms vs. Fiscal Stimulus - The report emphasizes that structural reforms alone are insufficient to address the current economic slump in China, which is primarily driven by balance sheet issues [78][79] - It argues for a shift towards fiscal stimulus measures, as seen in the US's response to the 2008 financial crisis, to effectively combat the recession [87][88]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies within it Core Insights - The crude oil market is currently in a state of anticipation regarding Iran's response to recent US military actions, which could significantly impact oil prices and supply dynamics [1][3] - Front-month WTI futures experienced a brief increase to $78.4 but have since retreated to around $76, indicating a resistance level below $80 despite geopolitical tensions [2] - Higher crude oil prices are expected to positively affect companies in the oil refining and exploration sectors, leading to increased earnings through higher selling prices and inventory valuation gains [3] Summary by Sections Crude Oil Market Dynamics - The market is closely monitoring Iran's potential actions following the US bombing of its nuclear sites, particularly the risk of closing the Strait of Hormuz, which is crucial for energy transportation [3] - The immediate impact of rising crude oil prices may negatively affect earnings in the electric power and gas sectors due to a lag in the fuel cost adjustment scheme [3] Impact on Companies - Companies in the oil exploration and development industry are likely to benefit from higher crude oil prices, which will enhance their revenue from oil and natural gas sales [3] - The petroleum products industry is also expected to gain from increased oil prices, not only through improved operational performance but also from favorable inventory valuations [3]

Investment Rating - The report indicates a positive outlook for the lithium battery industry, particularly for Chinese companies expanding in Europe, with a projected market capitalization increase for CATL from 1.1 trillion RMB to 1.6 trillion RMB by the end of 2025 [2]. Core Insights - The Inflation Reduction Act has driven significant capacity expansion by Japanese and Korean battery companies in North America, with LG Chem's capacity planning increasing from less than 50 GWh in 2022 to over 500 GWh by 2025 [4]. - The Chinese lithium battery market faces challenges of oversupply, but capacity utilization is recovering, and companies are accelerating overseas expansion, particularly in Europe [1][7]. - Solid-state battery technology is expected to achieve mass production by 2027, with investment opportunities arising from market fluctuations [1][9]. Summary by Sections North American Market Dynamics - Japanese and Korean battery companies are increasing their capacity in North America due to the Inflation Reduction Act, with LG Chem's capacity planning significantly increasing [4]. - LG Chem's profits turned positive in Q1 2025, benefiting from U.S. subsidies, but the company is reducing capital expenditures in North America due to policy uncertainties [10][12]. Chinese Market Challenges and Opportunities - The Chinese lithium battery market is experiencing severe oversupply, leading to a significant decline in profitability [5]. - Chinese companies are entering a new phase of internationalization, focusing on building manufacturing capabilities overseas, particularly in Europe [16][20]. European Market Outlook - The European electric vehicle market is expected to see demand release from 2025 to 2027, driven by new model launches and policy adjustments [19]. - CATL's European factories are gradually ramping up production, with expectations of significant valuation increases as they establish a strong market presence [23]. Solid-State Battery Market - The investment logic for solid-state batteries revolves around technological advancements, with SNE Research predicting a market penetration rate of 8% by 2027 [9]. - The solid-state battery market is expected to present trading opportunities, particularly when prices decline [25]. Competitive Landscape - Chinese lithium battery companies have established strong customer relationships and price advantages in Europe, positioning them favorably against Japanese and Korean competitors [20]. - The competitive landscape for Japanese and Korean battery companies is challenging, with potential declines in profitability if lithium subsidies are removed [16].