Investment Rating - The report does not provide a specific investment rating for the industry or currency discussed. Core Viewpoints - The report argues that the Renminbi (RMB) is unlikely to follow the path of the Japanese Yen from 1985 to 1995, primarily due to ongoing deflationary pressures and the need for a loose monetary policy [5][6][19]. Summary by Sections Historical Comparison - The report draws parallels between the RMB and the Yen, noting that while the Yen appreciated significantly (211% against the USD from 1985 to 1995), the RMB is not expected to follow this trend due to complex trade relations and domestic economic conditions [5][6][27]. Trade Tensions - It is emphasized that merely allowing the RMB to appreciate will not resolve the intricate issues in US-China trade relations, which include national security concerns and the need for structural changes in both economies [8][9][12]. Economic Challenges - The report highlights that a significant appreciation of the RMB could exacerbate existing deflationary challenges in China, weakening corporate profits and leading to reduced overall demand [20][21][19]. Structural Rebalancing - The report argues that currency appreciation alone will not facilitate the necessary structural rebalancing of the Chinese economy from an investment-driven model to a consumption-driven one [35][39]. Policy Implications - The report suggests that policymakers are likely to prefer managing currency depreciation rather than allowing significant appreciation, especially in light of ongoing economic challenges [19][36].

Investment Rating - The investment rating for Intel Corporation is Equal-weight [8][30]. Core Insights - Intel's foundry strategy may shift focus from the 18A process to the 14A process, which could lead to significant financial implications, including potential writedowns of hundreds of millions to billions of dollars [4][10]. - The company has scaled back its ambitions for the 18A process, which was initially expected to provide leadership in process technology, but the impact on economic performance for 2025/26 is expected to be minimal [5][10]. - Management's emphasis on focusing on core products and deferring foundry and AI initiatives until 2027 may realign priorities positively [10][20]. Summary by Sections Foundry Strategy - Intel's foundry efforts have been centered around the 18A process, but there are considerations to shift to the 14A process, which is slated for risk manufacturing next year [3][4]. - The 18A process was part of a strategy aimed at achieving "unquestioned leadership" in process technology, but expectations have been scaled back [3][5]. Financial Projections - The price target for Intel Corporation is set at $23.00, with the current stock price at $21.88 [8][26]. - Projected EPS for fiscal years 2025 and 2026 are $0.48 and $1.30 respectively, with a P/E ratio of 57.7 for 2026 [8][35]. Market Position - Intel maintains a significant market share in both client and server CPUs, despite facing challenges and competition from AMD [17][40]. - The company is expected to regain lost share in desktop and server markets following CPU shortages, which could stabilize its financial performance [40]. Management Strategy - The current management has shifted focus from a product-driven factory strategy to a more cautious approach regarding foundry ambitions, which may reduce distractions and allow for a stronger foundation for future growth [20][23]. - There is a recognition that building a competitive foundry business requires different skill sets and priorities compared to traditional integrated device manufacturing [12][14].

Investment Ratings - USD: Bearish [2][12][17] - EUR: Bullish [3][18][19] - JPY: Bullish [4][20][21] - GBP: Neutral [5][22] - CHF: Neutral [6][23] - CAD: Neutral [7][24] - AUD: Neutral [8][25] - NZD: Neutral [9][13] - SEK: Neutral [14][24] - NOK: Neutral [16][24] Core Insights - The report indicates a bearish outlook for the USD, driven by technical factors and expectations of weak growth alongside sticky inflation [2][12][17] - A bullish sentiment is maintained for the EUR, supported by technical momentum and FX hedging, with a significant amount of European holdings in US assets being unhedged [3][19] - The JPY is expected to outperform due to lower US terminal rate pricing and uncertainty regarding tariffs, which may enhance its appeal as a safe haven [4][20][21] - The GBP is viewed neutrally, with potential upside risks depending on local rate movements and fiscal concerns [5][22] - The CHF outlook remains neutral but with a bullish skew, contingent on inflation trends [6][23] - The CAD is expected to face downward pressure due to a bearish outlook on North American growth [7][24] - The AUD's direction is contingent on the RBA's upcoming rate decisions, with a potential rate cut anticipated [8][25] - The NZD outlook is neutral, with risks tied to RBNZ rate decisions [9][13] - The SEK and NOK are both viewed neutrally, with bearish skews due to economic data and oil price pressures [14][16][24] Summary by Currency - **USD**: Bearish due to technical forces and inflation concerns [2][12][17] - **EUR**: Bullish with strong technical support and FX hedging [3][19] - **JPY**: Bullish, benefiting from US data softness and tariff uncertainties [4][20][21] - **GBP**: Neutral with bullish risks based on rate movements [5][22] - **CHF**: Neutral but bullish skew based on inflation data [6][23] - **CAD**: Neutral with bearish risks from economic outlook [7][24] - **AUD**: Neutral with bullish risks depending on RBA decisions [8][25] - **NZD**: Neutral with downside risks from RBNZ [9][13] - **SEK**: Neutral with bearish risks from retail sales data [14][24] - **NOK**: Neutral with bearish risks from oil prices [16][24]

Investment Rating - The report maintains a bullish stance on U.S. Treasury duration and recommends staying long in curve steepeners [6][41]. Core Insights - The report highlights a dynamic labor market with slower private payroll growth but a low unemployment rate, indicating lower potential growth and equilibrium rates, which may lead to more Federal Reserve rate cuts [6][9][32]. - The employment report shows strength in state and local government jobs, particularly in education, which contributed significantly to overall payroll growth [10][11][22]. - The report suggests that as market-implied trough rates decrease, U.S. Treasury yields are expected to fall, supporting a bullish outlook on U.S. Treasury duration [35][41]. Summary by Sections Labor Market Analysis - The June employment report indicates slower private payroll growth, with a tighter labor market due to a decline in the labor force participation rate [9][32]. - State and local governments added 80,000 jobs in June, with education jobs accounting for 63,000 of these [11][12]. - The report notes that fewer teachers left for summer break than anticipated, which may have artificially boosted the seasonally adjusted figures [18][22]. Economic Outlook - The report emphasizes that lower potential growth will likely weigh on the equilibrium interest rate, suggesting that the Fed may need to cut rates more than currently expected [33][34]. - It is anticipated that the Fed's longer-run target rate may need to be adjusted downward over time [33][34]. Investment Strategies - The report recommends maintaining long positions in U.S. Treasury securities, particularly in the 5-year maturity sector, and suggests a UST 3s30s yield curve steepener [41][46]. - Specific trade ideas include maintaining long positions in UST SOFR swap spreads and SFRZ5 futures, with targets set for various instruments [46][49].

Investment Rating - The industry view for Greater China Telecoms is rated as Attractive [2][78]. Core Insights - The datacenter industry is currently experiencing a multi-year upcycle, driven primarily by inference demand, which is expected to significantly influence future capital expenditures [6][7]. - The top six companies in the datacenter sector are projected to increase their capital expenditures by 62% year-over-year, reaching approximately Rmb373 billion [9]. - Datacenter electricity consumption is anticipated to account for 2.9% of total electricity usage in China [13]. Summary by Sections Datacenter Cycle - The industry is in a multi-year upcycle, with strong demand expected to drive capital expenditures [6][7]. Capital Expenditure Forecast - Significant growth in capital expenditures is expected, with a forecast of Rmb373 billion for the top six companies, marking a 62% increase year-over-year [9]. Datacenter Orders and Capacity - Datacenter orders are forecasted to reach approximately 3.7GW over the next three years, indicating robust demand [11]. - New supply was limited during the previous downcycle, leading to a more rational approach to new third-party wholesale capacity [15][20]. REITs and Valuation - Rapid progress in REITs issuance is noted as a key driver for valuation and funding within the industry [20][23]. - A dividend yield of 5-6% is expected at issuance, with trading multiples potentially exceeding the issuance [25]. Regional Market Insights - Various regional markets, including Hong Kong, Greater Tokyo, and Singapore, show differing dynamics in terms of market size, return profiles, and future supply trends [28]. - Finland is emerging as a key secondary market in Europe, benefiting from favorable energy resources and a mix of green energy capacity [39][41]. Financial Forecasts - GDS Holdings is projected to achieve an EBITDA of approximately Rmb6,740 million by 2027, with a consistent growth trajectory in net revenues [49]. - The utilization rate for datacenter area is expected to increase to 81% by 2027, reflecting improved operational efficiency [50].

Investment Rating - The overall industry investment rating is "In-Line" [8]. Core Insights - The reconciliation bill passed by Congress is viewed as better than expected for most subsectors within the renewables space, removing a major overhang for the industry [2][3]. - Incremental buying is recommended for companies such as NEE, AES, BE, and FSLR due to the supportive provisions of the legislation [2]. - Strong industry growth is anticipated at least until 2028, with leading developers expected to continue strong growth and gain market share into 2030 [3]. Summary by Relevant Sections Large Scale Renewables - Full tax credits are available through mid-2030 for projects that started construction previously and for those starting through mid-2026 [3]. - The final version of the bill is slightly worse than initial expectations, but storage provisions remain favorable [3]. Manufacturing - Manufacturing tax credits remain unchanged, providing relief for FSLR [4]. Battery Storage - Tax credits for battery storage are significantly better than expected, available through 2033 before phasing down, positively impacting FLNC, NEE, and AES [4]. Residential Solar - The outcome for residential solar is challenging but better than bearish expectations for RUN, while ENPH and SEDG face more difficulties [5]. Fuel Cells - A new 30% tax credit for fuel cells through 2033 is a positive development for BE, enhancing the economic attractiveness of its products [6]. Nuclear - The nuclear sector remains neutral, with no significant changes for CEG, TLN, VST, and PEG [6]. Hydrogen - Clean hydrogen tax credits are better than expected, with elimination pushed to 2028, which is later than initially anticipated, providing modest positivity for PLUG [11]. Clean Fuel Production - Clean fuel production credits are extended through 2029, benefiting companies like DTE Energy and Dominion [20]. Foreign Entity of Concern (FEOC) Regulations - New restrictions on tax credits for projects involving prohibited foreign entities will begin in 2026, impacting eligibility based on material assistance thresholds [21][22]. Stock Ratings - Specific company ratings include Overweight for Bloom Energy Corp. (BE), First Solar Inc. (FSLR), and GE Vernova (GEV), while companies like Enphase Energy Inc. (ENPH) and Plug Power Inc. (PLUG) are rated Underweight [74].

Investment Rating - Industry View: In-Line [7] Core Insights - The US shale industry is experiencing accelerated consolidation due to its maturing state, with a focus on free cash flow (FCF), returns, and inventory quality [3][4] - M&A activity has slowed in 2025 after record levels in 2023 and 2024, with upstream deal value totaling approximately $17 billion year-to-date compared to $200 billion in 2023 and $100 billion in 2024 [5][9] - The shift in transaction value from oil to gas is notable, with gas basins accounting for 48% of all transaction value in 2025, up from 11% in 2023-24 [5] M&A Activity - The Permian basin represented 63% of total deal value in 2023-24, which has decreased to 32% in 2025, indicating a diversification in M&A focus [9] - A total of approximately $21 billion of US upstream assets are currently on the market, with several companies open to acquisitions [10][26] - Key considerations for hypothetical acquisitions include FCF accretion, synergies, and inventory extension [10][57] Market Dynamics - The slower M&A market in 2025 is attributed to macroeconomic uncertainty, a limited number of attractive opportunities, and larger producers focusing on integrating recent acquisitions [5][9] - The DJ basin is the most consolidated, with the top producer accounting for around 40% of the basin total, while other basins like Delaware, Bakken, and Eagle Ford are less consolidated [15] Financial Metrics - The median FCF yield for US E&Ps is projected to be approximately 9% in 2026, with significant variation across the sector [32] - The median 2026 EV/EBITDA is estimated at 4.4x, indicating a valuation metric for assessing company performance [38] Hypothetical M&A Scenarios - Various hypothetical public M&A combinations have been screened based on geographic overlap and management messaging, with potential synergies identified for several pairings [59][62][70]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies Core Insights - A-share investor sentiment has decreased, with the weighted Morgan Stanley A-share Sentiment Indicator (MSASI) dropping by 16 percentage points to 71% and the simple MSASI falling by 17 percentage points to 57% compared to the previous cutoff date [2] - Average daily turnover for ChiNext and A-shares increased by 13% and 15% respectively, while turnover for equity futures and Northbound trading decreased by 23% and 3% [2] - Southbound trading saw net inflows of US$2.4 billion from June 26 to July 2, with year-to-date and month-to-date net inflows reaching US$93.8 billion and US$0.6 billion respectively [3] - The Central Commission for Financial and Economic Affairs discussed structural rebalancing of China's growth model, focusing on fiscal system reform, realigning macro targets, and revamping performance evaluations, but no specific timeline or enforcement mechanism was provided [4] - Property data indicates that home prices in major cities experienced a softer decline of 1.0% month-on-month in June, with total listings increasing by 0.7% month-on-month, which may impact home sales and prices in the second half of the year [5] Summary by Sections A-Share Market Sentiment - The weighted MSASI is currently at 71%, indicating a decline in investor sentiment [6] - The average daily turnover for A-shares has shown an increase, suggesting some market activity despite the sentiment drop [2] Fund Flows - Southbound trading has recorded significant net inflows, indicating continued interest from international investors [3] Economic Policy and Structural Changes - The recent meeting of the Central Commission highlighted the need for structural reforms in the economy, although no concrete plans were announced [4] Real Estate Market Trends - Home prices in major cities are declining at a slower rate, but the increase in listings could pressure future sales and prices [5]

Investment Rating - The report maintains an "Overweight" (OW) rating for TSMC and expresses bullish sentiment towards AI-related investments, particularly in the semiconductor sector [2][4]. Core Insights - TSMC's CoWoS capacity is projected to grow over 30% year-on-year, reaching approximately 90-95k by 2026, which is favorable for both Nvidia and AI ASIC supply chains [1][2]. - There is strong demand for AI applications in China, but hardware supply constraints are identified as a significant bottleneck [3]. - The report highlights a robust growth forecast for cloud semiconductors in 2026, with TSMC's CoWoS-L capacity expected to expand to 68k, indicating strong demand for Blackwell and Rubin chips [2][8]. Summary by Sections AI Supply Chain Insights - The report indicates that Nvidia's B30 GPU shipments to China are uncertain and could impact China's AI capital expenditures [1][3]. - Chinese AI developers are considering alternatives like Huawei chips if Nvidia's B30 cannot be shipped, but they have not yet seen Huawei's 910C available for sale [3]. TSMC Capacity and Demand - TSMC's total CoWoS capacity is expected to be around 90-95k in 2026, reflecting a 33% increase from 70k at the end of 2025 [2][8]. - The report raises TSMC's CoWoS capacity forecast for 2026 from 90k to 93k wafers per month, with non-TSMC capacity remaining unchanged [8][9]. Customer Demand and Forecasts - Nvidia's CoWoS consumption is projected to remain at 580k units in 2026, with an increase in CoWoS-L consumption estimates due to strong demand [13]. - Broadcom's CoWoS consumption estimate is raised to 110k units in 2026, driven by higher demand for Meta's MTIAv3 chips [13]. AI Capex and Market Sentiment - The report anticipates that the top four US hyperscalers will generate $550 billion in operating cash flow in 2025, supporting ongoing investments in AI-related data centers [31][32]. - Average AI capex/EBITDA is expected to be around 50% in 2025, indicating strong financial capacity for further spending [32].

Investment Rating - The industry investment rating is Attractive [6] Core Insights - Despite weaker May industrial profit growth, the incremental impact on industrial credit risks remains small due to concentrated profit deterioration in a few sectors affected by US tariffs, a notable decline in US tariffs from their peak, and modest negative impacts on EBIT interest coverage [2][4] - More sectors are slowing capacity expansion, with ferrous metal processing showing a 1.6% year-on-year decline in fixed asset investment in May 2025, down from 5.4% year-on-year growth in the first half of 2024, indicating continued capacity control [3] - Year-to-date industrial sector profit fell 1.1% year-on-year in May compared to a 1.4% year-on-year decline in April, primarily affected by mining, particularly oil mining [4] - Risks around loans to the auto sector are emerging as a new concern, representing 40% of sectors showing expanding capacity with deteriorating profit, which is the largest drag on year-on-year profit growth in manufacturing firms [5] - Overall manufacturing sector profit growth moderated to 5.4% year-on-year in January-May 2025 from 8.6% in January-April 2025, partly due to the peak in US tariffs [9] Summary by Sections Industrial Credit Risks - The report indicates that the impact of weaker industrial profit growth on credit risks is limited due to the concentration of issues in specific sectors and the decline in US tariffs [2][4] - The mining sector, dominated by large state-owned enterprises, poses less concern for credit risks unless commodity prices remain pressured for an extended period [4] Capacity Expansion and Profit Trends - A significant portion of sectors (73.5% by liabilities) slowed capital expenditure growth in May 2025 compared to the first half of 2024, an increase from 66.8% in April 2025 [9] - Profit trends show that 42.7% of sectors experienced improvements, while 27.5% saw deterioration, indicating a shift in profit dynamics influenced by US export exposure and capital expenditure growth [9] Sector-Specific Insights - The auto sector is highlighted as a potential risk area, with significant capacity expansion occurring alongside profit deterioration [5] - The report emphasizes the importance of market-oriented credit allocation and loan pricing to manage industrial credit risks effectively over time [3]