Investment Rating - The report indicates a weakening trend in U.S. container imports, suggesting a cautious outlook for the transportation services sector [7][4]. Core Insights - The modified deadweight tonnage (MDWT) metric, which tracks container imports, showed a 3% decline week-over-week, with a significant 10% drop in container imports compared to the previous week [3][9]. - Year-over-year, total U.S. containership MDWT decreased by 15% in Week 19, indicating a potential slowdown in domestic freight activity [3][4]. - The Port of Los Angeles forecasts a 16% year-over-year decline in port volumes for May, reflecting a broader trend of weakening import volumes [4][14]. - Container exits from China and Hong Kong remain strong, with a slight decline of 1.5% week-over-week, but still close to record levels [5][18]. - Exits from other Asian countries, such as Vietnam, Indonesia, and Thailand, have increased by approximately 8% year-over-year, indicating a potential shift in sourcing patterns [18][21]. Summary by Sections U.S. Container Imports - The 4-week moving average (MA) of U.S. container imports was 6.2 million MDWT, down from 6.4 million MDWT in the previous week, but still above the local trough of 5.9 million MDWT in mid-April [9][12]. - The report highlights the correlation between MDWT and official TEU import data, with an r-squared value of 94%, suggesting that MDWT is a reliable early indicator of import activity [12][8]. Port of Los Angeles - The Port of Los Angeles reported a 1.5% year-over-year increase in total port volume for the four weeks ending May 10, but anticipates a decline in the coming weeks [4][14]. - The projected decline in TEU volume could be influenced by inventory levels and the timing of tariff reductions from China [4][14]. China and Other Asian Exits - Freight exiting China and Hong Kong ports was approximately 52 million MDWT, reflecting a strong exit rate despite a slight week-over-week decline [5][18]. - The report notes that sourcing shifts from China to other Asian countries may occur, with MDWT exits from Vietnam, Indonesia, and Thailand increasing significantly [18][21].

Investment Rating - Infineon: Buy [34] - STMicroelectronics: Buy [34] - Rohm: Neutral [34] - Onsemi: Neutral [34] Core Insights - The competitive threat from China in the power semiconductor market has intensified, with pricing for power electronics declining by 15% to 50% year-on-year in 2024, and continuing to decline in 2025, albeit at a slower rate [1] - Lean inventories are expected to support the market in the short to medium term, with most companies anticipating inventory clearance by the end of Q3 2025 [1] - Adoption of silicon carbide (SiC) is projected to accelerate in H2 2025 and 2026, although pricing pressures remain significant, particularly in the substrate segment [1] - Gallium nitride (GaN) adoption is expected to ramp up in 2026/27, driven by applications in onboard chargers and the server market, particularly with the rise of AI [1] Summary by Sections Competitive Landscape - China represents approximately 20-30% of revenues for most Western companies, with pricing now 10-20% lower than Western prices, indicating a narrowing gap [2] - The competitive threat from China is becoming more tangible, prompting Western companies to focus on higher-value products [2] Market Dynamics - The power semiconductor market is supported by strong fundamentals, particularly in electrification and the demand for high voltage applications such as electric vehicles (EVs) and data centers [3] - The overall sentiment from the power conference indicates a positive setup for H2 2025 and 2026, benefiting companies with diversified portfolios focused on high voltage applications [3] Company-Specific Insights - Infineon and STMicroelectronics are viewed positively due to their strong market positions and diversified portfolios [3] - Companies like Starpower are experiencing significant pricing pressures, with SiC product prices down 30-50% in 2024, impacting gross margins [17] - The shift towards GaN solutions is seen as critical for meeting the power density requirements of AI servers, with a focus on integrated solutions rather than discrete components [14]

Investment Rating - The report assigns a "Buy" rating for Infineon Technologies AG with a 12-month price target of €41.00, down from a previous target of €43.00 [8][6]. Core Insights - Infineon is showing initial signs of an upcycle, with year-over-year revenue growth for the first time in two years in FQ325. The company has conservatively adjusted its FY'25 guidance, which may allow for potential upgrades as the cycle improves [2][3]. - Despite tariff and currency headwinds, Infineon's idiosyncratic drivers remain strong, particularly in AI-related demand and exposure to the Chinese EV market, which is expected to offset weaknesses in Western markets [4][3]. - The company is experiencing some pricing pressure, particularly in standard power components and the industrial market, but gross margins are holding steady at around 41% [5][3]. Financial Projections - Revenue projections for FY'25 are set at €14.640 billion, reflecting a slight decline from the previous year, with expected revenues of €16.421 billion in FY'26 and €18.516 billion in FY'27 [7][20]. - The report anticipates a decrease in EPS for FY'25 to €1.40, down from a previous estimate of €1.57, with further reductions for FY'26 and FY'27 [9][14]. - Gross margin is expected to remain around 40% for FY'25, with a gradual increase to 41.3% by FY'27 [5][20]. Market Position and Valuation - Infineon is currently trading at a P/E ratio of 17x for FY'26 estimates, compared to a historical average of 19x, indicating potential value in the stock [2][6]. - The company has a market capitalization of €40.3 billion and operates with a free float of 100% [8][6]. - The report highlights a strong order intake, which remains flat quarter-over-quarter despite external pressures, suggesting resilience in demand [3][4].

ab 9 May 2025 Global Research China Equity Strategy 1Q25 investor positioning update - investors turned less underweight overall Divergent views among Asia/Global/EM mandated funds International investors have reduced their China underweight position from -1.9% to - 1.5% in 1Q25 likely cheered by the DeepSeek launch. Interestingly, Asia-mandated funds turned overweight (from underweight previously) and global funds reduced their underweight position, while EM funds have maintained their underweight position ...

Investment Rating - The report maintains a "Buy" rating for selected stocks within the industry, indicating a positive outlook for potential price appreciation over the next 12 months [39]. Core Insights - The report emphasizes that higher volatility in the market is likely to persist, primarily driven by tariff news and external shocks, with MSCI China experiencing an increase in daily share price volatility from 1.8% to 2.4% [2][4]. - Historical data suggests that during periods of rising volatility, the MSCI China index typically sees negative returns, averaging a decline of 6%, but often rebounds with an average return of 5% as volatility decreases [4]. - The report identifies that sectors such as banks and utilities perform well during rising volatility, while growth stocks like internet and tech tend to underperform [5]. - A "Low volatility" investment strategy has consistently yielded positive results during both rising and declining volatility environments [5]. Sector Performance Analysis - During rising volatility, defensive sectors such as utilities and banks have shown resilience, while property stocks have also outperformed as investors seek domestic policy support [5]. - Growth sectors, including internet and technology, generally underperform in high volatility scenarios due to increased discounting of future earnings [5]. - The report highlights that value factors like Price-to-Book (P/B) and Free Cash Flow Yield (FCFY) perform well in rising volatility, whereas Return on Equity (ROE) and Earnings Per Share (EPS) growth are more favorable in declining volatility [5]. Volatility Indicators - The HSI Volatility index has recently decreased from a peak of over 45 to around 25, indicating mixed return profiles for investors entering the market at this level [6]. - The report suggests that a spike in volatility could present a more favorable entry point for investors, while current levels warrant a cautious approach due to fundamental concerns such as potential tariff impacts and EPS forecast revisions [6]. Quantitative Factor Analysis - The report includes a quantitative analysis showing that stocks with low volatility have consistently outperformed during periods of rising volatility [12][14]. - It also identifies large-cap stocks that score highly on various factors, including low volatility and high quality, which are recommended for investment [18][21]. Top Stock Picks - The report lists several "Buy" rated stocks that have historically performed well during periods of rising volatility, including Qinghai Salt Lake Industry Co., Bank of Chengdu, and China Railway Group [15]. - Additionally, it highlights stocks that are expected to perform well after volatility peaks, suggesting a strategic focus on these selections for potential gains [16].

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies within it Core Insights - The top 100 developers' contract sales in April 2025 decreased by 9% year-over-year (YoY), an improvement from a 12% decline in March 2025, attributed to a lower base effect [2] - Sequentially, contract sales fell by 10% month-over-month (MoM), which is worse than the average decline of 5% MoM from 2020 to 2024, indicating concerns over the macroeconomic outlook amid trade tariff tensions [2] - The secondary market remains active, with secondary listings on Beike in 50 cities increasing by 8.3% YoY and 7.4% year-to-date (YTD) as of April 29, 2025 [3] - SOE developers outperformed other categories, with a 5% YoY decline in contract sales, compared to a 9% decline for the top 100 developers overall [4] Summary by Sections Contract Sales Performance - Top 100 developers' contract sales dropped 9% YoY in April 2025, with a 10% MoM decline, indicating a challenging sales environment [6][15] - SOE developers showed resilience with a 5% YoY decline, while semi-SOE and POE developers faced larger declines of 31% and 6% respectively [4][19] Secondary Market Activity - The secondary transaction volume for 12 cities increased by 22% YoY, reflecting strong upgrade demand as homebuyers seek quality new homes [3][24] - Tier-1 cities' secondary listings increased by 2.8% YoY and 5.8% YTD, indicating a robust market despite overall sales declines [3][9] Developer Performance - Among SOE developers, C&D International, Yuexiu, and Jinmao recorded significant contract sales growth of 53%, 24%, and 8% YoY respectively, while others like Poly Property and Country Garden saw substantial declines [4][6] - The overall contract sales value for the top 100 developers dropped 7% YoY in April, a slight improvement from an 11% decline in March [12]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The US has raised "reciprocal tariffs" on China to 125%, with China retaliating with similar tariff hikes, leading to significant trade tensions [2][3] - Approximately 60% of US imports from China are now subject to tariff hikes of 145%, which includes both the new reciprocal tariffs and previously implemented fentanyl tariffs [3][4] - The report anticipates a substantial decline in China's exports to the US, projecting a decrease of two-thirds in the coming quarters and an overall export decline of 10% in USD terms for 2025 [8][11] - A broad fiscal expansion of 1.5-2 percentage points of GDP is expected from China to support the economy amid these challenges [9][13] - The GDP growth forecast for China has been downgraded to 3.4% for 2025 and 3% for 2026, reflecting the adverse effects of tariff shocks [11][17] Summary by Sections Tariff Impact - The US has implemented significant tariff hikes on various goods, with the latest exemptions for electronics adding an estimated $64 billion of US imports from China to the exempted list [3][4] - The report suggests that ongoing tariff negotiations may not lead to immediate reductions in the current tariff levels [7] Economic Forecast - The report estimates that the tariff hikes will drag down China's GDP growth by more than 2 percentage points, with a notable impact on domestic investment and consumption [8][11] - The expected inflation in China is projected to be negative in both 2025 and 2026 due to reduced external demand and domestic price pressures [11] Currency Outlook - The report does not foresee significant movements in the USDCNY exchange rate, predicting it to trade around 7.5 by the end of 2025 [12][17]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The US has raised reciprocal tariffs on China to 125%, with additional tariffs related to fentanyl control, leading to a total of 145% on certain imports [2][3] - China has retaliated with similar tariff hikes, also reaching 125% on US imports [2][3] - Approximately 60% of US imports from China are affected by the new tariff hikes, while the remaining imports face lower tariff rates [3] - The report anticipates a significant decline in China's exports to the US, estimating a reduction of two-thirds in the coming quarters and an overall export decline of 10% in USD terms for 2025 [8][12] Summary by Sections Tariff Impact - The report outlines the timeline and magnitude of tariff increases, indicating a complex landscape for US-China trade relations [4][5][7] - It suggests that ongoing negotiations may not lead to immediate tariff rollbacks, maintaining the current baseline scenario of high tariffs [7] Economic Forecasts - The GDP growth forecast for China has been downgraded to 3.4% for 2025 and 3% for 2026, reflecting the adverse effects of tariff shocks [12] - The report predicts a more than 2 percentage points drag on China's GDP growth due to tariffs [8] Policy Measures - The report anticipates that China will implement new policy measures to support its economy, including a fiscal expansion of 1.5-2 percentage points of GDP [9][14] - It expects monetary policy adjustments, including potential cuts to policy rates and reserve requirement ratios [9] Currency Outlook - The report does not foresee significant movements in the USDCNY exchange rate, projecting it to trade around 7.5 by the end of 2025 [13][16]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific stocks Core Insights - The 'national team', represented by Central Huijin, is actively increasing its ETF holdings to stabilize the capital market and rebuild investor confidence, which has positively impacted market sentiment and led to a rebound in the A-share market [2][10][11] - Central Huijin's financial strength and access to liquidity support from the People's Bank of China (PBoC) enable it to significantly increase its market position in extreme scenarios [3][17][20] - The national team's ETF purchases in 2024 reached over RMB 770 billion, indicating a substantial commitment to maintaining market stability [4][33] Summary by Sections National Team's Role - Central Huijin has positioned itself as a "quasi-stabilisation fund" in the capital market, demonstrating its resolve to maintain stability through increased ETF holdings [2][10] - The national team's actions have led to a notable increase in trading volumes of various A-share ETFs since early April 2025 [11][12] Market Impact - The national team's ETF purchases were primarily concentrated in the CSI 300 index, which accounted for 71% of its total net inflow in 2024 [5][10] - The turnover of CSI 500 and CSI 1000 ETFs saw significant increases of 397% and 732% respectively compared to daily averages from the previous year, indicating heightened market activity [5][11] State-Owned Capital Involvement - State-owned capital operation platforms, such as China Chengtong and China Reform, have announced plans to increase their A-share holdings through ETFs, further supporting market stability [21][22] - These platforms are utilizing substantial relending funds (RMB 100 billion and RMB 80 billion respectively) for stock repurchases, indicating a coordinated effort to bolster the market [22][23] Historical Context - The national team's previous interventions, such as in 2015, involved significant market purchases, with aggregate shareholdings exceeding RMB 1.24 trillion, highlighting its historical role in stabilizing the market during downturns [4][39]

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 ...