Investment Rating - The report maintains a neutral stance on US Treasuries and a defensive position in US credit markets [4][32][28] Core Insights - The Federal Open Market Committee (FOMC) kept the federal funds rate steady at 4.25-4.50% for the third consecutive time, citing increased uncertainty in the economic outlook and heightened risks of both higher unemployment and inflation [10][19][20] - The unemployment rate remained stable at 4.2% in April, with expectations of GDP growth slowing to 1.0% on a Q4/Q4 basis this year and the unemployment rate potentially rising to nearly 5% by year-end [12][13] - The report expresses skepticism about the resilience of risky assets in the face of a tumultuous policy backdrop, suggesting that negative economic surprises could lead to a rapid decline in these assets [5][41][42] Summary by Sections Labor Market and Economic Outlook - The FOMC's decision to maintain rates reflects concerns over the impact of larger-than-anticipated tariffs on the economy, which could lead to different policy responses depending on inflation and unemployment trends [11][10] - The report forecasts three 25 basis point rate cuts in June, September, and December, contingent on labor market data showing signs of softening [13][14] Currency Analysis - The USD has shown modest strength following the FOMC's decision, with its value currently influenced by political and structural factors rather than solely by interest rate differentials [3][22] Fixed Income Strategy - The report maintains a neutral duration conviction on US Treasuries, indicating a wait-and-see approach amid policy uncertainty and mixed economic data [4][24] - Expectations for lower Treasury yields by year-end are noted, with a forecast of 3.50% for 10Y Treasuries by the end of 2025 [28] Multi-Asset Strategy - Risky assets have demonstrated resilience despite a challenging economic environment, but the report warns that this may not be sustainable [5][41] - The report highlights the potential for negative surprises in economic data to impact market sentiment and positioning, leading to a cautious outlook on equities [44][43] Credit Market Strategy - The report indicates that corporate spreads may not fully reflect the cyclical risks posed by tariffs, with expectations for wider spreads in the near term [32][36] - Revised year-end spread targets for US investment-grade (IG) and high-yield (HY) credit have been set higher, reflecting anticipated economic pressures [36][37]

Investment Rating - The FTSE World REIT Index has a rating of 26th out of 37 constituents in April 2025, with a return of +0.5% [2][10] - The FTSE World REIS Index performed better, achieving a return of +4.9%, placing it in the top quartile [2][10] Core Insights - The report indicates a divergence in performance between REITs and REIS, with REITs underperforming significantly, particularly in the US market [2][9] - Emerging markets, particularly Brazil, showed positive returns across all sub-sectors, while mainland China continued to underperform [5][9] - Data Centres in both developed and emerging markets rebounded in April after a sharp decline in March, indicating a recovery trend [2][9][19] Performance Summary - In the last month, developed markets saw the best performance from Developed Europe excluding the UK, while the US was the worst performer [5][9] - Over the last 12 months, most markets underperformed relative to their broader local indices, with the US and Developed Europe excluding the UK being exceptions [18] - The report highlights that the industrial sector continues to decline in developed markets, while data centres have shown significant positive returns over the last 12 months [19][49] Target Price Changes - In the last month, most markets recorded flat or declining target price cuts, with the US experiencing its first significant target price cuts of the year [14][54] - Over the last six months, the UK saw the sharpest target price downgrades, while the US was the only market to record marginal target price upgrades [54][59] Consensus Ratings - The US has seen a material rise in positive ratings over the last three and six months, despite a marginal increase in negative ratings [15][60] - South Africa recorded a significant rise in positive ratings, with a corresponding drop in negative ratings over the same periods [17][60]

Investment Rating - The report maintains a defensive positioning recommendation for the industry due to tariff risks and a cautious macro outlook [4][9]. Core Insights - The report highlights the impact of US tariffs on Japanese stocks, identifying 59 stocks with relatively high exposure and 63 stocks with relatively low exposure to potential 24% reciprocal tariffs [9]. - Export-heavy industries such as technology, automotive, and shipping are noted to have higher tariff exposure, while domestic-oriented sectors like retail and food show a divergence in impact [4]. - The Bank of Japan (BOJ) is expected to remain on hold regarding interest rates, with potential adjustments depending on the outcome of US tariff negotiations [5]. Summary by Sections Tariff Exposure Analysis - Analysts identified stocks with high and low exposure to US tariffs, emphasizing the need for investors to consider these factors in their investment decisions [3][9]. - The report provides a detailed list of companies most and least exposed to US tariff impacts, categorizing them by industry [10][11]. Economic Outlook - The report discusses the potential for an economic slowdown and its implications for corporate earnings, particularly in light of US tariffs [5][9]. - The macroeconomic strategy team anticipates that the Japanese Yen (JPY) will be supported by the Federal Reserve's actions in response to a US economic slowdown [5]. Stock Recommendations - The report includes specific stock recommendations based on their exposure to tariffs, with ratings such as Equal-Weight, Underweight, and Overweight assigned to various companies [10][11].

Investment Rating - The report indicates a positive outlook for China's trade, with export growth showing an upside surprise despite US tariffs, leading to a trade surplus of USD 96.2 billion in April [5][6]. Core Insights - China's exports to non-US markets, particularly ASEAN, have accelerated, contributing to overall export growth of 8.1% year-on-year in April, which was significantly higher than the HSBC and Bloomberg forecasts of 2.0% [5][6]. - Imports showed a narrower decline of 0.2% year-on-year in April, aided by a surge in processing imports, indicating resilience in trade despite external pressures [5][10]. - The report highlights the ongoing US-China trade tensions and potential tariffs on third markets as significant risks, emphasizing the importance of domestic policy support for sustaining growth [2][6]. Summary by Sections Trade Data Overview - Exports in April 2025 increased by 8.1% year-on-year, while imports declined by only 0.2% year-on-year, showcasing a shift in trade dynamics [3][5]. - Exports to the US fell sharply by 21.0% year-on-year in April, primarily due to escalating trade tensions and new tariffs [3][6]. Market Breakdown - Exports to ASEAN markets rose by 20.8% year-on-year in April, while exports to the EU increased by 8.3% [3][7]. - Imports from the US decreased by 13.8% year-on-year, reflecting the impact of retaliatory tariffs [3][10]. Product Breakdown - Mechanical and electrical products saw a year-on-year export growth of 10.1%, while high-tech products grew by 6.5% [3]. - Conversely, clothing and toys exports experienced a decline of 2.3% year-on-year [3][6]. Future Outlook - The report anticipates that US-China trade negotiations may lead to a partial rollback of tariffs, but significant headwinds for exports to the US are expected to persist [6][13]. - Domestic policy measures, including monetary easing and fiscal policies, are deemed crucial for stabilizing growth amid external uncertainties [13].

9 May 2025 Equity Research Report China Equity Strategy Equity Strategy Follow the money: Q&A on 1Q25 fund positioning Q1: Trade tensions – did institutional investors take pre-emptive action? Yes. Active mutual funds and northbound investors increased their positions in tech self- sufficient names during 1Q25. For "going global" stocks, active mutual funds cut their positions, while northbound funds remained constructive, especially for companies with: (1) business models less impacted by tariffs (e.g. inn ...

US Equity Strategy Equity Strategy & Equities Ten stock picks for an uncertain, volatile environment Initial sell-off broad-based but recovery uneven The initial post-Liberation Day sell-off was broad-based (99% of S&P 500 stocks fell), but the recovery over the past weeks has been uneven. Tech and Mag7 have largely driven the S&P 500 recovery. The equal-weighted S&P 500 has underperformed the index by c170bp and value underperformed growth by 620bp. Just 35% of S&P 500 stocks have recovered to pre-Liberati ...

Investment Rating - The report maintains a "Buy" rating for Aluminum Corp of China (Chalco) H/A shares, with target prices adjusted to HKD6.10 for H-shares and RMB9.80 for A-shares, implying upside potentials of approximately 42% and 48% respectively [5][40]. Core Insights - Chalco reported a net profit after tax (NPAT) of approximately RMB3.5 billion in 1Q25, reflecting a 5% quarter-on-quarter increase and a 59% year-on-year increase, attributed to better-than-expected sales volume and average selling prices (ASP) for aluminum and alumina [1][9]. - The company expects capital expenditures of RMB14.8 billion in 2025, focusing on wind power projects and new alumina production sites, while aiming to increase green power usage from 47% in 2024 to 55% in 2025 [2][9]. - Despite solid fundamentals for aluminum, earnings are expected to decline by approximately 12% in 2025 due to lower alumina prices, with the alumina price already below breakeven levels [3][9]. Financial Performance - In 1Q25, Chalco's sales volumes for self-produced aluminum decreased by 5% quarter-on-quarter, while alumina sales increased by 6% quarter-on-quarter. However, revenue and gross profits fell by 12% and 29% quarter-on-quarter respectively due to a significant drop in alumina prices [1][31]. - The company recorded a decrease in selling, general and administrative (SG&A) expenses by 6% year-on-year and 66% quarter-on-quarter, indicating effective cost control [1][31]. - Investment income rose by RMB0.37 billion in 1Q25, driven by higher alumina prices year-on-year and gains from hedging [36]. Production and Operational Strategy - Chalco's aluminum production operating rate reached 95% in China, supported by demand from electric vehicles, batteries, and solar products [3][9]. - The company plans to relocate alumina production from inland to coastal provinces to reduce transportation costs and expects to close down 1-2 million tons of alumina production in 2025 [2][34]. - Chalco aims to optimize its alumina capacity of 25 million tons by utilizing lower-cost imported bauxite, which may lead to some impairment losses [34]. Market Outlook - The report anticipates steady aluminum prices in 2025, supported by robust demand from the "New Three" sectors, while alumina prices are expected to have limited downside due to their current low levels [3][9]. - The coal price and electricity costs remained weak in 1Q25, which may benefit Chalco's operational costs [3][9].

25 April 2025 HKEX (388 HK) Buy: Purchase of permanent headquarter premises Purchase of new headquarters premises from Hong Kong Land (HKL): On 24 April, HKEX announced an agreement to purchase its permanent headquarters premises from HKL. The deal includes a consideration of HKD6.3bn and a commitment from HKL for enhancement works up to HKD400m for a total of 147,025 sq. ft. The purchase price is based on the carrying value of the property as of end- 2024. Based on a simplified calculation net of enhanceme ...

Metals Quarterly Q2 2025 Everything's "tariffic" Muddled outlook: Over the first several months of the year, the market has witnessed a range of views about metal prices – from optimism to pessimism to, perhaps, a new normal. One thing appears clear, however: uncertainty reigns. Tariffs have certainly taken center stage, and their potential impact will certainly play an important role in future policy actions, including change in direction of monetary policy. To stay on track for meeting its c5% GDP growth ...

US Restaurants Equities Defensive playbook warranted United States Escalating pressures, tempered outlook. On mounting macro headwinds, geopolitical uncertainty, and shifting consumer behaviors, we take a more measured view of the US restaurant sector outlook, lowering 2025-26e adjusted net earnings c4%, underpinned by: (1) Demand: US same-store sales (SSS) lower (average 2025-26e c90bp y-o-y) as affordability weighs on core lower-income consumers1 , but mitigated by premium trade- down from value-seeking h ...