Investment Rating - The report maintains an overweight stance on Financials and Industrials sectors, indicating a positive outlook for these areas [6][31]. Core Insights - The equity market has shown resilience despite new tariff announcements due to limited import cost exposure for S&P 500 industries, perceived temporary nature of higher tariff rates, and significant drawdowns already experienced by tariff-sensitive equities [5][7]. - The new tax bill is supportive of large-cap equity indices, with reinstated and expanded expensing likely to lower the "cash" tax rate, positively impacting cash flow for companies, particularly in Tech, Communication Services, and Healthcare sectors [21][22][30]. - Earnings revisions breadth has improved significantly, transitioning from -25% in mid-April to +3% currently, which has supported market stability amid trade and macroeconomic uncertainties [6][13]. Summary by Sections Tariff Impacts - Limited import cost exposure for S&P 500 industries due to exemptions and ongoing negotiations has mitigated immediate risks from tariffs [5][8]. - Significant risks remain if tariff rates on China increase or if the USMCA exemption for Mexico is discontinued, which could affect multiple industries with high import cost exposure [10][21]. Tax Bill Implications - The "One Big Beautiful Bill" is expected to enhance cash flow for large-cap corporates through upfront R&D expensing and bonus depreciation, particularly benefiting capital-intensive sectors [21][30]. - The Foreign-Derived Intangible Income (FDII) incentive is designed to encourage US companies to retain intellectual property domestically, benefiting sectors with significant foreign sales [34][35]. Earnings Revisions and Market Trends - The breadth of earnings revisions has shown a positive trend, with Financials and Industrials sectors experiencing the most significant rebounds [6][13][24]. - The upcoming earnings season is expected to reflect a low bar for 2Q earnings, with a consensus expectation of 4% year-over-year EPS growth and 3% sales growth [52][63].

Investment Rating - The report assigns an "In-Line" rating for Major Pharmaceuticals and an "Attractive" rating for Biotechnology in North America [7]. Core Insights - The latest weekly Total Prescription Year-over-Year (YoY) growth in the US was +2.4%, slightly down from +2.9% the previous week and consistent with +2.3% over the past 12 weeks [1][6]. - The rolling 4-week Total Prescription YoY growth was also +2.4%, while the rolling 12-week growth was +2.3% [2]. - The report highlights the launch performance of new drugs, such as BMY's Cobenfy for schizophrenia and VRTX's Journavx for acute pain, providing insights into their prescription trends and market expectations [3][4]. Summary by Sections Prescription Trends - The Total Market weekly TRx YoY change was +2.4% compared to +1.9% a year ago, indicating a positive trend in prescription growth [2]. - Extended unit (EUTRx) weekly YoY growth was +1.0%, which is below the TRx YoY growth [2]. Drug Launch Performance - BMY's Cobenfy has seen approximately 1,930 scripts in its launch week, up from 1,660 the previous week, with expectations to achieve 2025 consensus estimates requiring a TRx of ~153K [3]. - VRTX's Journavx recorded around 5,340 scripts in its launch week, with hospital scripts making up about 28% of total scripts, indicating strong initial uptake [4]. Key Product Analysis - The report includes a detailed analysis of key products' TRx YoY percentages, highlighting significant growth in drugs like Skyrizi (+44%) and Sotyktu (+77%), while others like Humira (-36%) and Revlimid (-12%) showed declines [21][23]. - The report also tracks the performance of the GLP-1 franchise, with Mounjaro and Zepbound showing substantial growth rates of 75% and 248% respectively [25][46].

Investment Rating - The industry view for large-cap banks in North America is rated as In-Line [8] Core Insights - Stablecoins currently do not serve as a substitute for bank deposits due to their lack of yield and limited acceptance as a payment tool, but this could change as the market evolves [2][11] - The growth of stablecoins could significantly impact the Treasury market, as they hold a considerable share of T-bills, with Tether holding approximately 66% of its reserves in T-bills, representing about 2% of the total T-bill market [4][15] - Institutional use cases, such as faster settlement and collateral mobility, are expected to drive further adoption of stablecoins [5] - The regulatory landscape for digital assets is evolving, with the Genius Act having passed the Senate, which will shape how stablecoins interact with the broader financial system [6][20] Summary by Sections Potential Implications for Bank Deposits - Stablecoins are not a current threat to bank deposits but banks should not be complacent and may consider issuing their own tokenized deposits [2][12] Stablecoins vs. Money Market Funds - Stablecoins are more regulated and cannot pay interest, treating holders as creditors, while money market funds can offer yields and equity ownership [3][13] Treasury Market Impact - The growth of stablecoins could increase demand for U.S. Treasury bills, providing the Treasury with a more stable buyer base for short-term debt [4][15][17] Growth Drivers - The current market cap of stablecoins is $263 billion, primarily driven by retail users, but institutional adoption is expected to fuel future growth [18] Legislative Outlook - The final regulatory frameworks will significantly influence the interaction of stablecoins with the financial system, with the Genius Act and Clarity Act being key legislative efforts [6][20]

Investment Rating - The industry investment rating is "In-Line" [6] Core Insights - The humanoid robot market is experiencing strong demand, with companies like UBTECH, Agibot, and Unitree announcing significant orders and contracts [2][3][8] - There is an expectation for more adoption announcements in the second half of 2025, driven by advancements in technology and a push from both companies and government for humanoid adoption [8] Summary by Relevant Sections - **UBTECH's Tiangong Walker**: Received orders for approximately 100 units and expects to deliver over 300 units in 2025, with over 60% of orders for premium versions [2] - **Agibot and Unitree Contract**: Awarded a Rmb124 million humanoid robot contract from China Mobile, with Agibot receiving Rmb78 million for full-size robots and Unitree Rmb46 million for smaller robots and accessories [3] - **Market Trends**: The focus is shifting from new model announcements to tracking adoption progress, indicating a maturation of the market and a potential for a virtuous cycle in humanoid technology [8]

Investment Rating - The industry investment rating is Attractive [7][9]. Core Insights - The insurance sector has shown strong performance over the past two years, driven by anti-involution, improved business quality, and market beta [9]. - Anti-involution measures are expected to continue benefiting both life and property & casualty (P&C) insurers, enhancing long-term profitability and balance sheet strength [3][9]. - Life insurers face risks related to interest rate spread loss, which has pressured valuations down to approximately 0.5x price-to-book (P/B) by early 2024 [4]. - P&C insurers are expected to benefit from eased competition in both auto and non-auto lines, potentially expanding underwriting margins [9]. Summary by Sections Life Insurance - The anti-involution measures for life insurers include cutting commissions and expenses across all channels, reducing pricing interest rates from 3.5% to an estimated 2-2.25%, and introducing a floating pricing interest rate mechanism [4]. - The introduction of a long-term evaluation mechanism on insurers' investment and efficiency is also part of the regulatory changes [4]. Property & Casualty Insurance - A restricted expense policy for P&C insurers has been in place since 2018 and was further strengthened in 2023 and 2024, with regulations expanding to non-auto lines in July 2025 [5]. Company Ratings - AIA Group Ltd: Overweight [61] - Ping An Insurance Group Co of China Ltd: Overweight [61] - China Life Insurance Co Ltd: Equal-weight [61] - China Pacific Insurance Group Co Ltd: Overweight [61] - PICC Group: Overweight [61] - ZhongAn Online P & C Insurance Co Ltd: Overweight [61]

Investment Rating - The report maintains a bearish outlook on the USD, expecting further weakness despite significant year-to-date depreciation [6][7][9]. Core Views - The underlying macro landscape is shifting, with cyclical and structural factors contributing to the bearish USD view, including US moderation, tariffs, and policy uncertainty [6][7][9]. - Recent technical indicators have turned less USD-bearish, suggesting potential short-term consolidation, but the medium-term outlook remains negative for the USD [6][9][34]. - The report emphasizes the importance of tariff developments, which could lead to increased global growth risks and further pressure on the USD [14][22][23]. Key Currency Drivers - The USD TWI has decreased by 6% year-to-date, while the DXY has seen a 10% depreciation, marking the weakest first half since at least 1980 [7][9]. - Key targets for G10 currencies include EUR/USD at 1.19 for Q3, GBP/USD at 1.36 for Q4, and USD/JPY at 139 for one year [6][9][12]. - The report highlights a tactical neutral stance on EM FX while maintaining a constructive medium-term view [6][9][12]. Tariff Implications - Recent tariff announcements have raised the effective tariff rate significantly, particularly for Brazil, which could lead to negative growth and inflation risks [14][17][22]. - The report notes that broad and high tariffs would likely keep the USD downtrend intact, with potential impacts on global growth and inflation dynamics [22][23][24]. - The report suggests that safe-haven currencies like JPY and CHF may outperform in response to tariff-driven global growth shocks [23][24]. Trade Recommendations - The report recommends buying CHF against a basket of EUR and GBP, anticipating that CHF will benefit from global growth revisions and a more aggressive tariff agenda [51][54]. - In developed markets, the report favors low-yielding currencies with firming growth characteristics, particularly JPY as a hedge against a US slowdown [51][52]. - The report indicates a tactical retreat in EM FX due to overbought signals but maintains a structural bullish view on EM currencies overall [52][57].

Investment Rating - The report indicates a shift in investment ratings for the EV and solar industries, with a more favorable outlook for energy storage systems (ESS) and critical minerals compared to solar and wind [16]. Core Insights - The "One Big Beautiful Bill" accelerates the phaseout of EV subsidies, expiring on September 30, 2025, compared to December 31, 2032, under the original IRA [16]. - The report highlights stricter restrictions on foreign entities, particularly from China, affecting the eligibility for investment tax credits (ITC) and advanced manufacturing production credits (AMPC) [16][17]. - There is a notable increase in domestic content requirements to qualify for additional credits, which may impact the cost structure for manufacturers [16][17]. Summary by Sections Part 1: EV Consumer Tax Credits - The final assembly of EVs must occur in North America to qualify for tax credits, with a maximum credit of $7,500 [6]. - Key requirements include MSRP limits of $80,000 for SUVs and $50,000 for other vehicles, with critical minerals and battery component restrictions starting in 2024 and 2025 respectively [6][7]. Part 2: Residential Clean Energy Credit - The residential clean energy credit remains at 30% for expenditures through December 2032, decreasing to 26% in 2033 and 22% in 2034 [10]. - No credits will be available for expenditures made after December 31, 2034 [10]. Part 3: ITC - The business tax credit for investment in zero-emission power and energy storage property is set at 30% of capital expenditures, with additional bonuses for domestic content [12]. - The credit rate will phase out based on the date of construction start, with specific thresholds for solar and energy storage systems [12]. Part 4: Advanced Manufacturing Production Credit - The AMPC will phase out for eligible components produced and sold, with a stricter non-PFE threshold compared to the Senate draft [13]. - The report emphasizes that projects with "effective control" by prohibited foreign entities will not receive credits, impacting U.S. battery production using Chinese components [16][17]. Key Changes vs. IRA - The report outlines significant changes from the original IRA, including the introduction of PFE restrictions and a more stringent domestic content requirement for tax credits [16]. - The overall stance on China has become tougher, with implications for U.S. manufacturers relying on foreign supply chains [16].

July 11, 2025 03:10 PM GMT Euro Area Fiscal Policy | Europe The EU's Multiannual Financial Framework: What to Expect? The MFF proposal will reveal the EC's long-term priorities and suggest concrete tools to achieve them. The focus is likely to be on defence and competitiveness. EU borrowing could be part of the proposal. We preview the first proposal for the MFF: Next week (on July 16), the European Commission (EC) will present its first proposal for its next Multiannual Financial Framework (MFF). The MFF i ...

Investment Ratings - The report maintains an "Overweight" (OW) rating on 37IE, an "Equal Weight" (EW) rating on G-bits, and an "Equal Weight" (EW) rating on Perfect World [1][3][4]. Core Insights - China's game industry has experienced high-teens percentage revenue growth year-to-date, surpassing the previous year's growth of 8%, indicating improved demand despite macroeconomic challenges [2]. - The report highlights successful new game releases and the stabilization of evergreen games as key factors driving the rebound in performance for 37IE, G-bits, and Perfect World [2][10]. Summary by Company 37IE - The price target is set at Rmb23.00, reflecting a 15x 2026 estimated P/E ratio, with an attractive 6% dividend yield [3][17]. - Anticipated revenue growth is supported by new titles such as "Soul Land," expected to generate Rmb300-500 million in its first month and Rmb1.5-2 billion overall in 2025 [16][17]. - The company has a robust pipeline with over 40 self-developed and licensed games, indicating sustained growth momentum [16][34]. Perfect World - The price target is raised to Rmb16.30, based on an 18x 2026 estimated P/E ratio, reflecting strong growth expectations driven by the anticipated title "Neverness to Everness" [4][29]. - The company is expected to see an 18% year-over-year revenue growth in 2025, with significant contributions from new titles [28][32]. - The release of "Zhuxian 2" on August 7 is also expected to be a key growth driver [4][31]. G-bits - The price target is increased to Rmb330, derived from a 15x 2026 estimated P/E ratio, reflecting a busy 2025 but a slower 2026 due to a weaker pipeline [5][22]. - Revenue growth is projected at 22% and 29% quarter-over-quarter and year-over-year in 2Q25, driven by new titles [20][22]. - The company is expected to experience alternating busy and slow product years, with 2025 being particularly strong [18][22].

Investment Rating - The industry investment rating is In-Line [5][17]. Core Viewpoints - The report emphasizes the need for Western governments and OEMs to support ex-China rare earth producers to establish independent supply chains, particularly in light of the US DoD's recent partnership with MP Materials, which includes a price floor guarantee for NdPr [1][2][3]. - The report identifies LYC (Lynas Rare Earths) and ILU (Iluka Resources) as key beneficiaries of the bifurcation in rare earth pricing and government support initiatives [4][3]. Summary by Sections Rare Earths Market Dynamics - The US DoD has agreed to a 10-year price floor guarantee of US$110/kg for NdPr starting from Q4 2025, which is expected to influence other countries to develop their own rare earth supply chains [2]. - There is a growing demand for high-performance rare earth magnets, potentially doubling current demand by 2050, driven by applications in defense, wind energy, and electric vehicles [3]. Company-Specific Insights - LYC is finalizing approvals for a heavy rare earth separation facility funded by the US DoD and is expected to reach a production capacity of 12ktpa NdPr [4][14]. - ILU is viewed as undervalued with potential upside from its rare earths refinery, and its mineral sands sales volumes are expected to improve in the coming years [26][32]. Financial Projections - LYC's revenue projections indicate growth from A$463 million in FY24 to A$1,390 million by FY27, with a diluted EPS expected to rise from A$0.1 to A$0.3 over the same period [21]. - ILU's revenue is projected to increase from A$1,123 million in FY25 to A$1,296 million, with EBITDA expected to rise significantly [41].