Investment Rating - The report indicates a positive outlook for the global construction machinery market, with expectations of year-on-year growth by 2026, despite a slight decline in the US market this year [1][3]. Core Insights - The construction machinery market shows resilience, with leading companies experiencing improved orders and inventory levels, indicating a recovery trend [1][3]. - Infrastructure investments in the US, driven by the Infrastructure and Jobs Act, are expected to maintain growth momentum through 2025 and 2026, although the real estate sector remains cautious due to high interest rates [1][6][8]. - The mining sector is projected to sustain equipment demand, supported by stable capital expenditures from major mining companies, despite a decline in oil and gas prices [1][9]. - Emerging markets like Indonesia and Brazil are experiencing growth driven by infrastructure and mining demand, with Chinese manufacturers expected to increase market share due to competitive pricing and strategic partnerships [1][18]. Summary by Sections Global Market Overview - The global construction machinery market is anticipated to grow year-on-year by 2026, with signs of recovery in leading companies' orders and inventory [1][3]. - The US market is expected to see a slight decline this year, but overall demand remains stable due to infrastructure investments [1][5]. US Market Dynamics - US construction machinery demand is closely tied to real estate, infrastructure, energy, and mining investments, with infrastructure accounting for approximately 50% of demand [5][7]. - The real estate sector is under pressure from high interest rates, leading to a cautious outlook for machinery demand [6][8]. - Infrastructure spending in the US is expected to remain supported through 2025 and 2026, with significant funding already allocated [7][8]. Mining Sector Impact - Despite a drop in oil and gas prices, metal prices remain high, supporting stable capital expenditures in the mining sector, which is crucial for equipment demand [1][9]. Equipment Rental Trends - North American equipment rental companies are expected to maintain revenue growth despite a slight decline in capital expenditures due to high interest rates [1][10]. Company Performance - Caterpillar's North American revenue has faced challenges, but backlog orders have reached historical highs, and price increases since 2021 have alleviated pricing pressures [1][11][13]. - Komatsu and Volvo anticipate a decline in North American demand in 2025, while Hitachi expects a slight decrease, reflecting concerns over housing and infrastructure demand [1][14][15]. Emerging Markets - Emerging markets are experiencing growth driven by infrastructure and mining demand, with Chinese manufacturers gaining market share due to competitive advantages [1][18][19]. Investment Recommendations - The report recommends SANY Group as a top investment choice due to its strong profit margin resilience and overall performance, followed by XCMG Group and Zoomlion for their competitive positioning in the market [1][27].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies involved in the US-Japan tariff negotiations Core Insights - The third round of US-Japan tariff negotiations did not result in significant changes, with Japan continuing to advocate for the removal of reciprocal tariffs on autos, steel, and aluminum [2] - Economic security emerged as a key theme in the discussions, reflecting its importance in both the US-Japan negotiations and the recent US-UK trade agreement [4] - The Japanese government is exploring the establishment of a "Japan-US fund for reviving the shipbuilding industry," indicating a focus on enhancing cooperation in sectors deemed critical for national security [6] Summary by Sections Trade Negotiations - The third round of negotiations on May 23 saw no major shifts in Japan's position, with a focus on achieving an agreement during the upcoming G7 summit [2] - A telephone conversation between Prime Minister Shigeru Ishiba and President Donald Trump prior to the negotiations covered various topics, including tariff negotiations and economic security [3] Economic Security - Economic security was highlighted as a significant factor in the negotiations, with implications for tariffs on key imports [4] - The discussions included Japan's interest in securing rare earth supplies and cooperation on alternative technologies, further emphasizing the strategic nature of the negotiations [3] Shipbuilding Industry - The potential establishment of a Japan-US fund for the shipbuilding industry could lead to deeper collaboration in this sector, which is viewed as vital for national security [6] - The report suggests that government initiatives aimed at enhancing economic security will impact a wide range of Japanese companies beyond just shipbuilding [6] Investment Opportunities - The trade talks are expected to encourage further investment in the US, particularly in shipbuilding and other sectors related to economic security [5] - President Trump's recent announcements regarding commercial deals in the Middle East, totaling around $2 trillion, may also serve to attract more Japanese investment in the US manufacturing sector [7]

Investment Rating - The report indicates a positive investment outlook for the coffee industry, particularly highlighting the competitive advantages of Luckin Coffee over Starbucks in the Chinese market [1][2]. Core Insights - Luckin Coffee has rapidly expanded with a total revenue of 13 billion yuan in 2022, a year-on-year growth of 67%, and has achieved its first annual profit with over 20,000 stores [1][4]. - Starbucks faces challenges such as a lagging pricing strategy and slow product iteration, leading to a decline in same-store sales [5][6]. - The potential of the lower-tier market is significant, with Luckin and other brands successfully penetrating this segment, while Starbucks is slower to adapt [7][8]. - The overall coffee consumer base in China has reached approximately 400 million, with a compound annual growth rate of about 6% from 2017 to 2023 [11][12]. Summary by Sections Market Competition - The coffee market in China is highly competitive, with Luckin Coffee and Starbucks adopting different strategies; Luckin focuses on high cost-performance and frequent innovation, while Starbucks struggles with pricing and product updates [2][19]. - The competition has shifted from price wars to platform-based ecological competition, with brands like Luckin and Mixue Ice City expanding their product lines [3][19]. Consumer Trends - There is a noticeable trend towards high-frequency consumption among younger consumers, with daily coffee consumption increasing from one cup to one to two cups [10][21]. - The demand for coffee is evolving, with a shift from traditional flavors to innovative combinations, indicating a bright future for the industry [20][21]. Market Expansion - The coffee industry is seeing a significant increase in store openings in lower-tier cities, which are becoming crucial growth markets due to rising education levels and disposable income [14][15]. - The report highlights that the penetration rate of coffee consumption remains low, particularly in lower-tier cities, presenting opportunities for brands that can effectively cater to this demographic [11][14]. Brand Strategies - Luckin Coffee's strategy includes launching a new limited product every 45 days and expanding into new categories like light milk tea, achieving a full-day consumption model [6][4]. - Starbucks is attempting to enhance its private traffic operations and expand into lower-tier cities, but the effectiveness of these measures has been limited [5][7]. Future Outlook - The coffee industry is expected to transition from price sensitivity to value sensitivity, with a growing demand for diverse and innovative products [20][21]. - Brands with strong supply chains, such as Luckin and Mixue, are well-positioned to capitalize on the structural opportunities in the low-price market [18][22].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific securities [1]. Core Insights - The model projection for USD/CNY is 7.2168, which is 265 pips higher than the previous projection of 7.1903 and 128 pips higher from the previous official spot close [1]. - The model projection with the counter-cyclical factor is 7.2048, indicating a 145 pips increase from the previous fix [1]. Summary by Sections Model Projections - The USD/CNY fix model projects a value of 7.2168, reflecting a significant increase compared to previous values [1]. - The counter-cyclical factor adjustment results in a slightly lower projection of 7.2048, still indicating an upward trend [1]. Recent Model Errors - The report includes figures illustrating recent model errors without counter-cyclical factor adjustments, which may provide insights into the accuracy of the projections [4]. Calendar of Events - Key upcoming events that may impact the industry include the FOMC meetings on June 18 and July 30, 2025, and the expiry of the 75-day delay in TikTok app actions on June 19, 2025 [9]. - The PBoC's Q2 monetary policy meeting is scheduled for the end of June 2025, which could influence market conditions [9]. Analyst Contributions - The report is prepared by a team of analysts from Nomura, indicating a collaborative effort in the research process [2].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The US and China have agreed to reduce reciprocal tariff rates by 115 basis points, which is larger than previously expected, indicating a potential easing of trade tensions [15] - Tariff-induced inflationary pressures are anticipated to increase core PCE inflation in the coming months, with expectations of a 25 basis point rate cut in December 2025, followed by additional cuts in early 2026 [15] - The labor market is showing signs of slowing, with risks skewed to the downside, suggesting a gradual cooling rather than a sharp deterioration [15] - The Bank of Canada (BoC) is expected to implement a 25 basis point cut in June 2025, with a prolonged trade war potentially leading to deeper cuts [15] - The European Central Bank (ECB) is projected to cut rates to 1.50% by September to support the economy amid US tariff shocks [15] - Japan's economy is expected to remain on a recovery path, but higher US tariffs pose downside risks [15] - Asia's export and capital expenditure growth is likely to slow sharply in the second half of 2025 due to tariffs and weak global demand, with open economies being the most vulnerable [15] Summary by Sections United States - Core PCE inflation is likely to remain subdued in April, with expectations of a modest increase [24] - Durable goods orders are expected to have fallen by 7.8% month-on-month, driven by a decline in transportation equipment orders [25] - Consumer confidence is projected to improve to 91.0 in May from 86.0 in April, reflecting positive trade developments [27] Europe - Disinflation in the euro area is expected to remain on track, with HICP inflation forecasted to align with the ECB's 2% target [38][41] - German consumer confidence remains below pre-pandemic averages, but plans for increased government spending may improve sentiment [40] Asia - China's economy is projected to experience steady expansion in the first half of the year, but policy support may be ramped up in the second half to achieve growth targets [15] - In India, GDP growth is expected to rise in Q1, but leading indices indicate potential declines ahead [15] Global Economic Outlook - Global GDP growth is forecasted at 3.3% for 2024, with developed markets at 1.7% and emerging markets at 4.5% [11] - The report highlights the potential for a deeper rate-cutting cycle in response to economic challenges across various regions [15]

Investment Rating - The report has revised up the Q2 and 2025 annual GDP growth forecasts to 4.8% y-o-y and 4.5%, respectively, from 3.7% and 4.0% [2] Core Insights - China's economy is expected to experience a steady expansion in the first half of the year, with major activity data growth exceeding that of Q4 last year, driven by exports and consumption [1][3] - A significant slowdown is anticipated in H2, with GDP growth potentially dropping to 4.0% v-o-v due to payback effects from front-loading, a high base, and ongoing issues in the property sector [2][5] - The US-China trade negotiations during the 90-day truce are likely to focus on reciprocal and fentanyl-led tariffs, with the current average US tariff on China estimated at about 42% [4][8] Summary by Sections Economic Outlook - Growth of industrial production, retail sales, and fixed asset investment improved to 6.4%, 4.7%, and 4.0% y-o-y, respectively, in the first four months of 2025 [3] - CPI and PPI inflation were both negative in the first four months of 2025, at -0.1% and -2.4%, respectively [3] Trade and Tariffs - A sharp drop in export growth is expected, from an estimated 6.0% y-o-y in Q2 to -2.0% in Q3 and -8.6% in Q4 [5] - The average US tariffs on China remain high at about 42%, which could inflict material damage on Chinese exporters [5][8] Policy Measures - The People's Bank of China (PBoC) announced a new round of monetary stimulus measures, including RRR and rate cuts, with a forecast for a 50bp RRR cut in Q4 [6][62] - Fiscal spending has accelerated significantly, with total net government bond issuance reaching RMB4,890 billion in the first four months of 2025, a 250% y-o-y increase [69] Consumer Behavior - Retail sales growth is expected to drop sharply in H2, with forecasts of 3.3% y-o-y in Q3 and 2.9% in Q4, down from 4.7% in Q1 [37][46] - The consumer trade-in program has provided a temporary boost to retail sales, but a payback effect is anticipated as momentum fades [36][51] Property Sector - The property sector continues to face challenges, with new home sales declining by -3.2% y-o-y in the first four months of 2025 [52] - The ongoing housing crisis is weighing on the economy, with significant impacts on local government finances due to decreased land sales and property-related tax revenues [54][64]

Investment Rating - The report does not explicitly provide an investment rating for the healthcare and pharmaceuticals sector in China, but it indicates potential negative impacts from US drug price reductions on Chinese firms [1][3]. Core Insights - The US healthcare expenditure is a significant portion of global healthcare spending, with high drug prices being a contributing factor [2]. - A potential executive order by the US government to reduce drug prices by 30-80% could adversely affect Chinese companies involved in the US market, including those with innovative drugs, CROs providing services to US pharmaceutical firms, and companies out-licensing clinical-stage assets to multinational corporations [1][3]. Summary by Sections - **US Drug Price Impact**: The potential executive order from the US president aims to lower drug prices significantly, which could lead to pressure on Chinese firms with drugs in the US market and those providing services to US pharmaceutical companies [1][3]. - **Market Dynamics**: The report highlights that if US drug prices are cut, it may create a long-term negative price outlook for Chinese firms that out-license clinical-stage assets to multinational corporations [3].

Investment Rating - The report indicates a positive outlook for the smart glasses and AI mattress markets, suggesting significant growth potential in these sectors [1][22]. Core Insights - The smart glasses market is diversifying, with a shift towards all-in-one AI audio/camera glasses, while demand for display-enabled smart glasses is rapidly increasing [1][4]. - The global AR device market is dominated by VR/MR technologies, with AR glasses showing strong performance in China, projected to ship approximately 280,000 to 290,000 units in 2024 [1][5]. - AI smart mattresses are emerging as a new durable consumer product, with market growth influenced by usage scenarios and pricing strategies [1][6]. - The AI glasses face challenges in functionality and user experience, particularly in weight, design, and battery life, impacting their market appeal [1][10]. - The report highlights the competitive landscape of the domestic AR device market, with leading companies holding significant market shares and continuing to innovate [3][13]. Summary by Sections Smart Glasses Types and Development - Smart glasses are categorized into three types: split AR glasses, all-in-one AI audio/camera glasses, and display-enabled smart glasses, with the latter experiencing rapid growth [3][4]. - The domestic split AR device market is stable, with leading companies like Thunderbird Innovation and XREAL capturing 60%-70% of the market share [3][13]. Market Growth Projections - Domestic sales of split AR glasses are expected to grow by approximately 36% year-on-year, while all-in-one AI smart glasses are projected to grow by about 42% [17]. - The AI smart mattress market is anticipated to grow by around 14% by 2025, although its growth potential may be weaker compared to smart glasses [20]. Competitive Landscape - Leading companies in the smart glasses sector include Thunderbird Innovation and X6, which together hold over 60% of the market share [21]. - In the AI smart mattress market, Mousse Co. is positioned as a leader, with its latest product expected to generate significant revenue [21]. Investment Opportunities - The report suggests that both smart glasses and AI mattresses present substantial investment opportunities, particularly as they are expected to catalyze growth in their respective industries [22][23].

Investment Ratings - Zhaowei Machinery & Electronic: Not rated [1] - Honor Electronics: Not rated [2] - Kingdee: Buy [3] - Marketing Force: Not rated [5] Core Insights - Zhaowei Machinery & Electronic is expected to achieve over 20% year-on-year sales growth in 2025, driven by the electric vehicle (EV) segment and localization trends, despite potential softness in consumer electronics [1] - Honor Electronics anticipates over 30% year-on-year revenue growth from its data center power supply segment in 2025, following an 80% year-on-year growth in 2024, primarily due to high-power products for GPU servers [2] - Kingdee aims for breakeven in FY25E with low-teen year-on-year top line growth, supported by strong order momentum in the large enterprise segment, while facing uncertainties in the SME segment [3] - Marketing Force's "All-in-one" machine and AI agents are expected to be key growth drivers, with AI agents potentially increasing average revenue per user (ARPU) by 10-20% for SME customers [5][6] Summary by Sections Zhaowei Machinery & Electronic - Management projects over 20% sales growth in 2025, supported by partnerships with domestic OEMs in the EV segment and advancements in humanoid robots, although consumer electronics demand may soften [1] Honor Electronics - The company achieved 80% year-on-year revenue growth in 2024 for its data center power supply segment, with a forecast of over 30% growth in 2025, and holds approximately 30% market share in GPU server power supplies [2] Kingdee - Kingdee's management reiterated a target for breakeven in FY25E, with expectations of low-teen year-on-year growth and improved gross and operating profit margins, while the SME segment faces uncertainties [3][4] Marketing Force - The "All-in-one" machine powered by DeepSeek's LLM is seeing strong demand, and AI agents are expected to enhance revenue streams significantly for both SME and key account customers [5][6] AI Industry Trends - The LLM industry is focusing on improving reasoning models and developing AI agents, which are anticipated to drive demand for computing power significantly [7][8] - The introduction of standardized protocols like MCP is expected to support the ecosystem for AI agents, with hardware supply chains preparing for market growth [8] Liquid Cooling Industry - The liquid cooling market in China is experiencing intense competition, with a shift towards more sustainable technology solutions expected to benefit market leaders [9][10][11] Cloud Computing Industry - The non-AI cloud market remains competitive, while AI cloud services are identified as a key growth engine for leading tech companies [12][13]

Investment Rating - The report indicates a significant de-escalation in the US-China trade war, which may positively impact GDP growth forecasts for Q2 [1][2]. Core Insights - A joint statement from the US and China announced a substantial reduction in tariffs, with US tariffs on China decreasing from 145% to 30% for an initial period of 90 days, while China's tariffs on US goods will drop to slightly above 10% from about 125% [1][2]. - The report highlights that 91% of the tariffs will be removed by both sides by May 14, with an additional 24% suspended for 90 days [2]. - There is a consensus to address the fentanyl issue, with both countries committing to take aggressive actions to stem its flow from China to North America [3]. - China has agreed to suspend or remove non-tariff countermeasures against the US, which may include export controls on rare earth minerals [3][4]. Summary by Sections Tariff Changes - The US tariffs on China will be reduced to 30%, which includes a 20% tariff related to fentanyl and a 10% base reciprocal tariff [2]. - China's tariffs on US goods will be lowered to slightly above 10%, which includes a 10% retaliatory tariff to match the US base reciprocal tariffs [2]. Non-Tariff Measures - China will adopt necessary measures to suspend or remove non-tariff countermeasures taken against the US since April 2, including export controls on rare earth minerals [3][4]. - The report notes that seven rare earth minerals are under export controls, which are critical for various high-tech applications [4]. Export Control Lists - On April 4, China added 16 US entities to its Export Control List, prohibiting the export of dual-use items to them [5][9]. - Additionally, 11 US firms were placed on China's Unreliable Entity List, barring them from import and export dealings with China [8][10].