The US raised "reciprocal tariffs" on China to 125% on April 9, but announced a 90-day pause on such tariffs on other economies, replacing it with a broad 10% tariff hike. The "reciprocal tariffs" is in addition to the 20% tariff hikes (related to fentanyl control) that have already been implemented by the Trump administration since early February this year, and on top of the tariffs added during the first Trump administration and Biden era. China has retaliated with similar tariff hikes on US goods since t ...

ab 15 April 2025 Global Research China Economic Perspectives China Economic Outlook: Bracing For More Tariffs More US tariffs on China and China retaliated Electronics imports are excluded from "reciprocal tariffs" for now On April 11, US CBP posted a notice that exempted smartphones, computers, semiconductors and other electronics goods from the US reciprocal tariffs, which we think also includes those related imports from China. These latest exemptions added an estimated $64 billion of US imports from Chi ...

ab 11 April 2025 Global Research China Equity Strategy ADR delisting concerns rise again… expect less impact this time HK portion has likely overtaken the US part for ADRs The US Treasury Secretary in a media appearance indicated the possibility for US-listed China ADRs to be delisted as a part of the conditions for trade negotiations. While in 2021 and 2022 such delisting fears resulted in an average drawdown of 22% for the ADR names, we would expect any potential impact to be more manageable this time aro ...

ab 14 April 2025 Global Research China Equity Strategy All you need to know about the 'national team' 'National team' to rebuild confidence via ETFs and managing expectations Before China's stock market close on 7 April, Central Huijin Investment (Central Huijin) announced it had increased ETF holdings and would continue buying. Before the open on 8 April, it said it was the "national team" in the capital market and would serve as a "quasi-stabilisation fund". We note an increase in various A-share ETF trad ...

Investment Rating - The report maintains a cautious stance on the China equity markets, emphasizing capital preservation as the near-term priority [2][3]. Core Viewpoints - The report suggests that downside risks currently outweigh upside potential in the China equity markets due to escalating US-China tensions, global economic uncertainties, and a focus on short-term investments [2][3]. - The MSCI China index is trading at a 13% discount compared to its historical average P/E relative to MSCI World, indicating potential attractiveness despite the uncertainties [2]. - The report highlights that further deterioration in trade relations could lead to additional market drawdowns, as historical data suggests a 2% market decline for every 10% increase in tariffs [3][4]. Sector Preferences - The report recommends a tilt towards high dividend names for defensive purposes, particularly in the consumer staples sector, while avoiding exposure to export-oriented sectors [5][8]. - The most preferred sectors include high dividend names, consumer staples, internet, and A-share TMT, while construction and machinery are among the least preferred [8][9]. - Specific stock picks include China Mobile, NetEase, and Tencent Holdings, all rated as "Buy" with projected price targets indicating significant upside potential [8][36].

ab 8 April 2025 Global Research China Equity Strategy According to media reports on 7 April, an authoritative source said Central Huijin is taking initiatives to stabilise the market. We note CSI 300 ETFs trading volumes rose further on 7 April (see How to track and quantify inflow from the 'national team'?). As per our estimation, the 'national team' (Central Huijin) inflows into A-share ETFs netted Rmb420.2/34.9/316.7bn in Q1/Q2/Q324, out of a full-year total of Rmb771.8bn (Figure 14We stimaCenrl HuijnA-s ...

Investment Rating - The report provides a "Buy" rating for several companies including Marvell Technology (MRVL), NVIDIA (NVDA), Semtech (SMTC), Broadcom (AVGO), Micron Technology (MU), LAM Research (LRCX), Teradyne (TER), Analog Devices (ADI), Advanced Micro Devices (AMD), and Arm (ARM) [6] - Companies rated as "Neutral" include Indie Semiconductor (INDI), Entegris (ENTG), Western Digital (WDC), Applied Materials (AMAT), Seagate Technology (STX), KLA (KLAC), Qualcomm (QCOM), GlobalFoundries (GFS), Qorvo (QRVO), and Skyworks Solutions (SWKS) [6] Core Insights - The semiconductor industry is experiencing significant growth driven by AI and data center demand, with companies like ARM and NVIDIA positioned to benefit from this trend [11] - ARM is expected to see strong growth in its key markets, particularly in data centers and smartphones, with a target price of $215 representing a 99% upside [11] - NVIDIA's GPUs are dominating the AI workload market, with substantial growth opportunities anticipated, leading to a target price of $185, indicating a 69% upside [11] - AMD is also expected to gain market share in AI, with a target price of $175, reflecting a 70% upside [11] - Broadcom is leveraging its position in AI and networking, with a target price of $270, suggesting a 60% upside [11] - The report highlights potential risks for Intel (INTC), which is rated Neutral, due to concerns about its product roadmap and competitive positioning [11] Summary by Company - **Marvell Technology (MRVL)**: Positioned well in AI with a target price of $110, indicating a 77% upside [11] - **NVIDIA (NVDA)**: Dominating AI workloads with a target price of $185, reflecting a 69% upside [11] - **Semtech (SMTC)**: Expected to benefit from AI infrastructure growth, with a target price of $60, indicating a 71% upside [11] - **Broadcom (AVGO)**: Strongly positioned in AI with a target price of $270, suggesting a 60% upside [11] - **Micron Technology (MU)**: Target price of $130, indicating a 47% upside [11] - **LAM Research (LRCX)**: Target price of $130, suggesting a 31% upside [11] - **Teradyne (TER)**: Target price of $130, indicating a 57% upside [11] - **Analog Devices (ADI)**: Target price of $300, suggesting a 49% upside [11] - **Advanced Micro Devices (AMD)**: Target price of $175, indicating a 70% upside [11] - **Arm (ARM)**: Target price of $215, reflecting a 99% upside [11] - **Indie Semiconductor (INDI)**: Rated Neutral with a target price of $4.5, indicating a 113% upside [11] - **Entegris (ENTG)**: Rated Neutral with a target price of $115, suggesting a 30% upside [11] - **Western Digital (WDC)**: Rated Neutral with a target price of $50, indicating a 23% upside [11] - **Applied Materials (AMAT)**: Rated Neutral with a target price of $175, suggesting a 21% upside [11] - **Seagate Technology (STX)**: Rated Neutral with a target price of $105, indicating a 24% upside [11] - **KLA (KLAC)**: Rated Neutral with a target price of $735, suggesting a 9% upside [11] - **Qualcomm (QCOM)**: Rated Neutral with a target price of $190, indicating a 24% upside [11] - **GlobalFoundries (GFS)**: Rated Neutral with a target price of $45, suggesting a 22% upside [11] - **Qorvo (QRVO)**: Rated Neutral with a target price of $85, indicating a 19% upside [11] - **Skyworks Solutions (SWKS)**: Rated Neutral with a target price of $70, suggesting a 9% upside [11] - **Intel (INTC)**: Rated Neutral with a target price of $23, indicating a 1% upside [11]

Investment Rating - The report maintains a positive outlook on the semiconductor industry, particularly focusing on the potential impacts of AI diffusion rules on NVIDIA's revenue, estimating a potential revenue impact in the range of 10-15% if supply/demand equilibrium is assumed [2]. Core Insights - The AI diffusion rules are seen more as a bureaucratic delay rather than a fundamental risk to NVIDIA, with most Tier 2 countries having limited new capacity for AI infrastructure over the next few years [2]. - Microchip Technology's issuance of $1.485 billion in convertible preferred stock is aimed at avoiding a covenant breach and subsequent downgrade, with a projected headwind to EPS of approximately $0.05 per quarter for the next three years [3][5]. - Increased competition from domestic Chinese suppliers, particularly SiCarrier, poses a challenge to US semiconductor equipment suppliers, as they introduce new toolsets aimed at enhancing China's production capabilities [6]. Summary by Sections AI Diffusion Rules - The report discusses the implications of AI diffusion rules on data center capacity and NVIDIA's revenue, highlighting that most Tier 2 countries will not meet the compute cap by 2027 due to limited planned deployments [2][11]. - It notes that shipments to Singapore represented less than 2% of NVIDIA's FY25 revenue, indicating limited exposure to potential revenue impacts from the AI diffusion rules [2][13]. Microchip Technology - Microchip Technology's recent convertible preferred stock issuance aims to eliminate outstanding commercial paper and avoid a downgrade to high yield, with a significant portion of proceeds allocated to debt paydown [3][5]. - The issuance will result in a dilution of share count and EPS by approximately 5% if the stock price remains below $70, with updated EPS estimates reflecting this impact [5][22]. Competitive Landscape - The emergence of SiCarrier and other domestic Chinese suppliers introduces new competitive pressures for US semiconductor equipment suppliers, particularly in inspection and metrology tools [6][10]. - The report highlights the potential for these suppliers to accelerate the replacement of existing US equipment in domestic chip manufacturing [6]. Economic Indicators - The report emphasizes the importance of upcoming PMI and ISM releases, which are expected to provide direction for semiconductor stocks amid macroeconomic uncertainty [7]. - The consensus for these indicators is neutral, with a focus on the new orders component, which has shown a negative reversal recently [7]. Tariffs and Trade - The US government's announcement of 25% tariffs on auto imports and parts is expected to pressure sentiment on automakers and their suppliers, with potential price increases of $4-5k per vehicle required to mitigate the impact [8]. - Comments from major companies regarding USTR investigations suggest a desire for a more structured approach to protect domestic interests without resorting to tariffs that could harm US interests in China [9][10].

Investment Rating - The report does not explicitly provide an investment rating for the industry [1]. Core Insights - Following a 100 basis point hike by the Central Bank of Brazil (BCB), the report anticipates a subsequent 50 basis point hike in May, another 50 basis points in June, and a halt at 15.25% [3]. - The inflation forecast for South Africa has been adjusted to 3.4% for 2025, down from 3.5% [3]. Summary by Sections Current Forecasts vs Last Week - The report includes a comparison of current forecasts against those from the previous week, highlighting changes in economic indicators [2][14]. Forecast Highlights - The report provides detailed forecasts for various economic indicators, including Real GDP growth, Consumer Prices, and Fiscal balances for multiple countries [11][12]. - For the US, Real GDP is forecasted at 2.8% for 2024, 2.0% for 2025, and 1.8% for 2026, with inflation rates of 3.0%, 2.7%, and 2.5% respectively [12]. - Japan's Real GDP is projected at 0.1% for 2024, 1.2% for 2025, and 0.7% for 2026, with inflation rates of 2.7%, 3.1%, and 1.8% [12]. - The Eurozone is expected to have a Real GDP growth of 0.7% in 2024, 0.9% in 2025, and 1.1% in 2026, with inflation rates of 2.4%, 2.3%, and 2.0% [12]. Global Assumptions - The report outlines global assumptions for currency exchange rates and bond yields, including an expected EUR/USD rate of 1.12 by the end of 2025 and a 10-year US Treasury yield of 4.25% [13].

Investment Rating - The report assigns a "Buy" rating for Tencent Holdings with a 12-month price target of HK$676.00, while the current price is HK$502.00 [4][25]. Core Insights - Tencent is expected to benefit from AI advancements in its core businesses, particularly in online gaming, advertising, and cloud services. The integration of generative AI is enhancing content production and user experience in gaming, optimizing ad performance, and improving cloud service efficiency [2][3][8]. - The company is well-positioned for long-term growth through its Weixin ecosystem, which is seen as a trusted platform for Agentic AI, facilitating transactions and user engagement [3][8]. - The report highlights a robust revenue growth forecast, with revenues projected to increase from Rmb609,015 million in 2023 to Rmb735,186 million in 2025, reflecting a compound annual growth rate (CAGR) of approximately 10.5% [6]. Summary by Sections Financial Performance - Revenue projections show a steady increase from Rmb609,015 million in 2023 to Rmb916,840 million by 2028, with net earnings expected to rise from Rmb157,688 million in 2023 to Rmb347,008 million in 2028 [6]. - The report anticipates an EPS growth from Rmb16.41 in 2023 to Rmb38.21 in 2028, indicating strong profitability [6]. Market Position - Tencent's market capitalization is noted at HK$4,683 billion (approximately US$602 billion), with a free float of 66% [4]. - The company has a significant user base of 1.4 billion on its Weixin platform, which enhances its competitive edge in the digital ecosystem [3]. Valuation Metrics - The report indicates an attractive valuation with a projected P/E ratio of 17x for 2025, based on a 13% EPS CAGR from 2024 to 2026 [8]. - Forecast returns suggest a price appreciation of 34.7% and a dividend yield of 1.0%, leading to an overall forecast stock return of 35.6% [9].