Investment Rating - The report maintains a neutral stance on duration while finding value at the front end of the yield curve [3][11][17] Core Insights - The report projects the first Federal Reserve cut in December 2025, with expectations for 2-year Treasury yields to reach 3.50% and 10-year yields to reach 4.35% by year-end 2025 [11][14] - The oil market is factoring in a 21% chance of a significant disruption in Gulf energy production, with crude prices potentially reaching $120-130 [8][45] - The report emphasizes a shift in focus from monetary policy to fiscal policy, particularly regarding the German budget and NATO agreements on defense spending [8][49] US Rates - Value is found at the front end, with expectations for higher yields to add duration as money markets are pricing in earlier and more aggressive Fed easing than the report's forecast [3][11] - The report anticipates an increase in Treasury coupon auction sizes starting in February 2026, although there may be a forgoing of increases to longer-end auction sizes [3][30] International Rates - Developed market yields remained stable despite geopolitical tensions, with central bank meetings occurring amid subdued market activity [4][48] Commodities - The report highlights a major oil supply disruption risk at 21%, with a bullish outlook on corn and cotton prices despite muted price responses [8][45] Currencies - The report maintains a bearish stance on the USD, driven by US growth moderation and global fiscal policies that support growth outside the US [70][72] Emerging Markets - The report recommends an overweight position in emerging market currencies while underweighting emerging market sovereign credit, with a market weight stance on local rates and corporates [8][45]

Investment Rating - The report suggests an "Overweight" rating for sectors benefiting from the influx of educated youth into the workforce, particularly in services, healthcare, financial services, high-tech industries, and hospitality & entertainment [66][69]. Core Insights - Youth unemployment in China has increased significantly, from approximately 10% in 2018 to around 21% in the summer of 2023, but this is viewed as an opportunity rather than a threat due to the unprecedented level of education among the youth entering the workforce [2][5][6]. - China is transitioning from an industrial policy-driven economy to a services-oriented economy, with a notable increase in the contribution of services to GDP, which has risen from 32% in 1990 to 55% in 2023 [4][53]. - The report highlights that the most educated cohort in China's history is entering the labor market, with tertiary education enrollment rates soaring from 3% in 1990 to 75% in 2023, indicating a well-prepared workforce [4][14][10]. Summary by Sections Youth Unemployment - Youth unemployment is currently misinterpreted as a threat, while it actually presents an opportunity for economic growth as the most educated population enters the workforce [6][13]. - The report emphasizes that the rise in youth unemployment should be viewed through the lens of potential service consumption growth [6][20]. Human Capital Development - China has rapidly upskilled its population, with 15,467 per 100,000 now holding a degree, a fourfold increase over the past 20 years [4][10]. - Investment in education has increased from 2.4% of GDP in 2005 to 4.0% in 2022, leading to a significant rise in STEM graduates [4][39]. Service Sector Growth - The services sector in China is expected to grow significantly, with the potential to reach levels comparable to the US, where services contribute 76% to GDP [53][55]. - Key sectors identified for growth include healthcare, financial services, high-tech industries, and hospitality & entertainment, which currently employ a lower percentage of the labor force compared to the US [62][66]. Investment Opportunities - The report lists specific companies that are well-positioned to benefit from the growth in service consumption, including Trip.com, MGM China, NetEase, and Ping An Group, among others [66][69][88]. - The financial intermediation sector is highlighted as having substantial growth potential, particularly in health and protection products, with a noted lack of active CPAs in China compared to the US [70][69]. Healthcare Sector - The healthcare sector is poised for growth, with China now holding a 20% share of global PCT patent publications in biotechnology, second only to the US [76][81]. - The report identifies companies like Innovent and Akeso as potential beneficiaries of the expanding healthcare services market [76][81].

June 25, 2025 02:00 PM GMT Internet | North America Where Are We Trading Now: Geopolitics vs. Fundamentals Ahead Internet names fell -2% last week (SPX/NDX flat) with GOOGL - 5% (search debate) and AMZN/META -1%/flat. Markets saw gains to start the week amid tentative ceasefire talks in Middle East. EPS and fundamentals are next with AMZN/GOOGL/META 29X/17X/25X '26 EPS (-5%/-10%/+12% vs TTM avg). We would greatly appreciate your 5-star vote in the Internet Large Cap and Internet SmidCap categories in this y ...

Investment Rating - The industry investment rating is Attractive [9] Core Insights - Meituan has established a strong competitive advantage in quick commerce, with expectations for Alibaba's e-commerce and local services to enhance adoption [1][6] - Meituan's Instashopping gross transaction value (GTV) is projected to reach Rmb350 billion in 2025, reflecting a 30% year-over-year growth [5] - The downsizing of Meituan's Select mini program is viewed positively, as it allows for more investment in profitable areas like Instashopping and international expansion [4] Summary by Sections Meituan - Meituan is ramping up its quick commerce business by increasing the number of Instamarts and expanding product categories, with a focus on tier 1 and 2 cities [3] - The closure of Select warehouses, which incurred losses of approximately Rmb7 billion in 2024, is expected to free up resources for more strategic investments [4] - The company has over 30,000 Instamarts and more than 5,000 merchants, achieving break-even in 2024 [5] Alibaba - Alibaba is merging Eleme and Fliggy into its e-commerce group, which is anticipated to create strong synergies across e-commerce, on-demand delivery, and travel segments [12][13] - This strategic move follows JD's entry into quick commerce and food delivery, highlighting the competitive landscape [13] Financial Projections - Meituan's core local commerce operating profit (OP) is forecasted to be Rmb53 billion for 2025, with new initiatives expected to incur losses of Rmb11 billion [7] - The total on-demand retail market in China is projected to reach Rmb2 trillion by 2030, with Meituan's total on-demand retail GMV expected to reach Rmb1 trillion by the same year [18][22]

June 25, 2025 11:42 AM GMT China Brokers | Asia Pacific What Do We Think of the Brokers' Rally? China Financials: Why we are more confident in a financial system cycle bottom (4 Jun 2025) China Financials: Supporting consumer loans with more diversified loan pricing a positive (24 Jun 2025) China Financials: Lujiazui Forum focusing on financial market development and opening up (18 Jun 2025) Key Takeaways We have been highlighting that financial risk cleanup and digestion are largely done, and that the fina ...

Investment Rating - The report initiates coverage on China Reinsurance Group with an "Overweight" rating, highlighting its dominant position in the Chinese reinsurance market with a projected market share of nearly 50% in 2024 [1][9][14]. Core Insights - China Reinsurance Group is positioned as a benchmark in the Chinese reinsurance industry, benefiting from unique product offerings that help alleviate capital pressure on life insurance companies. The company is expected to experience growth rates higher than direct insurance companies throughout economic cycles [1][9][14]. - The demand for financial reinsurance contracts is anticipated to increase due to macroeconomic pressures, particularly from life insurance companies facing solvency challenges. This positions China Re as a critical player in the market [1][4][29]. - The company has a significant overseas business exposure, contributing approximately 15% to its total premium income, which helps diversify business risks and provides foreign exchange hedging benefits [1][4][14]. Summary by Sections Investment Rationale - The overall reinsurance industry in China is projected to see a rise in gross written premiums (GWP) to RMB 228 billion in 2024, with China Re holding a market share of about 50% [13][14]. - The report emphasizes the company's unique business model and its ability to maintain lower volatility in underwriting performance compared to direct insurers, which typically experience more significant fluctuations [13][14]. Financial Performance - China Re's consolidated GWP is expected to reach approximately RMB 178 billion (USD 25 billion) in 2024, with a five-year compound annual growth rate (CAGR) of 4.2% from 2019 to 2024 [13][14]. - The report forecasts a net profit growth of 87% for 2024, driven by strong underwriting performance and favorable investment results [38]. Valuation - The report employs a price-to-earnings (P/E) valuation method, suggesting a target price of HKD 1.40 by December 2025, based on a P/E ratio of 5 times the expected earnings for fiscal year 2025 [9][14][23]. - The valuation is considered conservative compared to the average P/E ratios of 6-8 times for global reinsurance peers, reflecting China Re's market dominance and growth potential [9][14][23]. Overseas Business Strategy - The acquisition of Bridge Insurance in 2018 has significantly enhanced China Re's overseas business, with this segment now contributing 15% to total premium income, up from 3% in 2018 [46][48]. - The report highlights the advantages of having a diversified overseas business, including risk mitigation from regional catastrophes and improved asset-liability management [46][48].

June 22, 2025 02:01 PM GMT China Financials | Asia Pacific Payment Connect another modest positive for financials Key Takeaways Another step in accelerated financial opening up: This follows the recent top financial regulators' discussion on opening up at the Lujiazui Forum, and facilitates more efficient cross-border current account payments between HK and China residents. Another small positive for financial names particularly AIA, HKEX and FUTU: Considering the rate differences between Mainland China and ...

Investment Rating - The industry investment rating is Attractive [6] Core Insights - The 11th round of National Drug Volume-Based Procurement (VBP) is approaching, with a preliminary list of 75 generics proposed, including 14 drugs for further evaluation [9] - Drug selection criteria aim to balance pricing with clinical practice considerations, focusing on generics with narrower indications or higher clinical risks [2][9] - Huadong Pharmaceutical has key drugs at stake, with indobufen and alogliptin accounting for 16% and 3% of its total drug sales in 2024, respectively [3] Summary by Sections Drug Evaluation - Among the 75 drugs proposed, 14 will undergo further evaluation, including five with narrower indications and nine generics considered high risk in clinical practice [2][4] - The official guidelines for the VBP will be announced soon, with adjustments made to bidding guidelines to consider clinical use and safety [9] Company Impact - Huadong is particularly exposed due to its key drugs, but the overall impact on other pharmaceutical companies is expected to be manageable [3][10] - The report outlines the potential impact on various companies, indicating that Huadong's drugs are under patent litigation, which may affect their inclusion in the final VBP list [11] Market Context - The report highlights the market sizes for specific drugs in China, such as Vancomycin (Rmb2 billion), Ceftazidime-avibactam (Rmb1.3 billion), and Mycophenolate (Rmb1.7 billion) [4][5] - The analysis indicates that the impacts of the VBP are generally anticipated and not surprising to the pharmaceutical coverage universe [9]

Investment Rating - The report maintains a positive outlook on experience and learning-related services consumption names, recommending eight quality consumer services with an average forward P/E of 17x and 19% year-on-year sales growth [31]. Core Insights - Despite overall lackluster consumption trends in China post-reopening, selected "new consumption" stocks have significantly outperformed the MXCN index, with an average weighted index for Lunar New Year consumption rising by 21% compared to 10% for MXCN through June 12 [5][6]. - The ACGN sector has shown remarkable performance, with stocks like Pop Mart and Bloks rising by 155% and 94% respectively, while other sectors like Hainan travel/shopping and e-bikes lagged behind [5][6]. - The report highlights a structural shift in consumer behavior towards services over goods, with services consumption categories such as Transport & Communications and Education, Culture & Recreational Services growing at 15% and 18% year-on-year in 2023, compared to overall consumption growth of 9% [5][6]. - The report identifies nine experience and learning-related consumption names that are expected to benefit from favorable seasonal spending trends during the summer [5][31]. Summary by Sections New Consumption Trends - Two key trends identified are affordable treats, including ACGN goods and government-subsidized trade-ins, and experience-related consumption such as movies and travel [6][31]. - The report notes that leading affordable treats have outperformed year-to-date, indicating a shift in consumer preferences towards smaller pleasures rather than big-ticket items [5][6]. Valuation and Growth Potential - Valuation levels for top new consumption names are now comparable to established global brands, with significant upside potential for future growth [5][6]. - The report emphasizes that the ability to surprise on future growth is crucial for maintaining valuations in the new consumption space [5][6]. Recommendations - The report recommends focusing on experience and learning-related services, which are expected to benefit from seasonal trends and a structural shift towards services consumption in China [31]. - Specific companies highlighted include Tencent, NetEase, Trip.com, and Kuaishou, which are positioned well for growth in the digital entertainment and travel sectors [31].

中国 证券研究 2025 年 6 月 22 日 证券研究报告 保险 证券分析师: 王丹 AC (86-21) 6106-6349 dan.wang@jpmorgan.com 登记编号: S1730524080001 摩根大通证券（中国）有限公司 风格敞口 | | 当前接名 | | 历史摘名,百分位(1表示排名第1) | | | | --- | --- | --- | --- | --- | --- | | 量化因子 | (百分位) | 6个月 | 1年 | 34 | 5年 | | 价值 | 2 | 2 | 1 | 2 | 2 | | 成长 | 52 | 56 | 72 | 68 | 70 | | 动者 | 18 | 2 | 22 | 76 | 85 | | 质量 | 60 | 61 | 70 | 54 | 52 | | 低波动性 | 77 | 74 | 67 | 60 | 72 | | ESG量化得分 | 97 | 97 | 96 | 9 | 91 | 中国太平 - H 集中风险较高的保险公司，股息吸引力欠佳；首次覆 盖，给予"减持"评级 中国太平是运营历史最悠久的国有保险公司，在服务国家需求方面有着 出色往 ...