Investment Rating - The report suggests a favorable investment outlook for risk assets in 2026, particularly recommending a bullish stance on stock assets, especially in the US stock market, with the S&P 500 index expected to reach 7,800 points by the end of 2026 [1][7]. Core Insights - The report anticipates that by 2027, the Chinese economy will begin to recover, driven by food planning recommendations, improved US-China trade relations, and forecasts for the US and global economies. Key drivers for this recovery include technological innovation and consumer spending [1][4]. - The US economy is expected to remain resilient in 2026-2027, with AI investments boosting short-term economic performance and long-term productivity. The annualized profit growth for the US stock market is projected to reach 15% from 2025 to 2027 [1][7]. - The Chinese real GDP growth rate is forecasted to be 7.8% in 2026, with nominal GDP growth at 4.1%. By 2027, real GDP growth is expected to slightly slow to 4.6%, while nominal GDP growth rebounds to 4.8% [1][4]. Summary by Sections Economic Outlook - 2026 is viewed as the final year of China's battle against deflation, with significant progress expected by 2027. The US economy is projected to show resilience, particularly due to AI-related investments [3][4]. - The Asian economy's growth drivers are expected to shift from technology sectors to non-technology sectors, especially in domestic demand and consumption [14][15]. Stock Market Insights - The US stock market is favored, with expectations of broad market gains rather than reliance on a few large companies. Japan's stock market is also viewed positively due to favorable fiscal policies, while European stocks are expected to benefit from a strong US economy [7][8]. - Emerging markets are relatively underweighted, but India, Singapore, and Saudi Arabia are highlighted as favorable investment opportunities [2][7]. Policy Recommendations - To address challenges in the Chinese real estate market, potential policy measures include subsidizing mortgage rates, learning from Hong Kong's experience in removing purchase restrictions, and enhancing social feedback mechanisms [5][6]. - The report emphasizes the need for aggressive macroeconomic support policies to achieve significant valuation recovery in the Chinese stock market, which is expected to stabilize around a price-to-earnings ratio of 12-13 times [9][10].

Investment Rating - The report maintains a cautious outlook on the overall consumption market, indicating a bottom consolidation phase, with specific recommendations for companies like China Resources Beer, Baisheng China, and Haidilao [1][7]. Core Insights - High-income groups and residents in first and second-tier cities show strong consumption willingness, particularly in high-end luxury goods, which have been recovering since September [2][3]. - The overall retail sales growth for October was 2.9%, slightly lower than September, indicating a stabilization in consumer spending [2]. - E-commerce platforms have been suppressing product prices due to subsidies, but this pressure is expected to ease next year, potentially stabilizing prices for sensitive categories like daily necessities and dining out [6][21]. Summary by Sections Consumer Behavior - High-income consumers (monthly income above 30,000) and residents in major cities are optimistic about future spending, correlating with the recovery in luxury goods sales [3][4]. - Middle and low-income consumers exhibit more cautious spending behavior [4]. Product Categories - Categories such as sports goods, electronics, and daily necessities are expected to see slight increases in spending over the next quarter, particularly during the year-end and Spring Festival [5][6]. - Online retail sales in October grew by 4.9%, down from 7.3% in September, influenced by early Double Eleven promotions [9]. Company Recommendations - The report recommends China Resources Beer in the beer sector, Baisheng China in the dining sector, and highlights the potential of Deepzhou Company in the apparel OEM business [7][8]. - Atour Hotel's retail business is projected to exceed 800 million yuan during Double Eleven, with a year-on-year growth of over 60% [8]. Market Trends - The home appliance sector saw a 15% year-on-year decline in sales, while smartphone sales, particularly for the iPhone 17, increased by 23% [10]. - The duty-free industry experienced a 35% year-on-year growth in early November, driven by policy changes and increased consumer spending [20][21]. Industry Outlook - The gold and jewelry sector is facing pressure from VAT reforms, leading to price increases and necessitating close monitoring of demand elasticity [22][23]. - Companies like Chow Tai Fook and Lao Pu are highlighted for their growth potential, with expected increases in sales and market share [23].

Investment Rating - The report indicates a positive outlook for Chinese stocks, with Goldman Sachs expecting 10.4% annualized total returns over the next decade [1]. Core Insights - The report highlights that MXCN gained 1% while A-shares slipped 1%, with October credit and activity data broadly missing expectations [1]. - The PBOC adopted a less dovish tone in its Q3 monetary policy report, leading to a revision in policy rate cut expectations [1]. - The report notes that Alibaba is launching the "Qwen" personal AI assistant project to compete with ChatGPT, indicating a focus on technological advancements [1]. - Southbound Connect saw US$3.2 billion inflows this week, reflecting investor interest in Chinese equities [1]. - Real export growth is expected to be 5-6% year-on-year in the coming years, despite uncertainties surrounding US tariff policies [1]. Performance Summary - MXCN/CSI300 12-month forward P/Es are reported at 13.0x and 14.6x respectively, with EPS growth estimates for 2025/26 at 2%/16% for MXCN and 14%/14% for CSI300 [8]. - The report emphasizes that AI beneficiaries have significantly contributed to North Asia's year-to-date performance, with Taiwan, Korea, and China showing strong gains [11]. - The report suggests that A shares are likely to modestly outperform H shares in the next three months [22]. Sector and Market Insights - The report identifies key sectors for investment, favoring Internet/Media/Entertainment, Consumer Retail & Durables, and Tech Hardware & Semiconductors, while being underweight on Telecom Services and Utilities [10]. - The macro backdrop is seen as favorable for global and domestic cyclicals along with dollar-sensitive sectors [10]. - The report indicates that 83% of all China-listed companies have reported earnings so far, with 9M/3Q25 earnings rising 6%/11% year-on-year [20].

Investment Rating - The report maintains an equal-weight rating on equities, overweight in core fixed income, and underweight in other fixed income [4][5]. Core Insights - The Federal Reserve is expected to initiate rate cuts, with four consecutive 25 basis point cuts anticipated through January 2026, leading to a terminal rate of 2.875% [2][20]. - The macroeconomic environment is characterized by a focus on improving expectations despite ongoing trade tensions and global slowdown risks, with a preference for quality assets [3][4]. - The report highlights a constructive outlook on USD assets, while cautioning about potential pressures on the dollar due to rising policy uncertainty [4]. Economic Outlook - In the US, real GDP growth showed a recovery in Q2 2025, but domestic demand has slowed, averaging 1.9% quarter-on-quarter in the first half of the year [8]. - The Euro area experienced stable GDP growth in the first half of 2025, with PMIs indicating continued firmness [9]. - Japan's nominal growth remains positive, supported by resilient manufacturing sentiment, while China's GDP growth is expected to soften in the second half of the year due to reduced stimulus [9]. Sector Recommendations - In the US, the report favors quality cyclical stocks and those with high operational efficiency, while in Japan, it recommends companies benefiting from domestic reflation and defense spending [6]. - Key sectors in Europe include defense, banks, software, telecoms, and diversified financials, with a focus on resilient market pockets [6]. - Emerging markets are favored towards financials and domestic-focused businesses over exporters [6]. Earnings Forecasts - The S&P 500 is projected to have an EPS of 259 for 2025, increasing to 283 in 2026, reflecting a 7% and 9% year-on-year growth respectively [7]. - The MSCI Europe index is expected to see a slight decline in EPS for 2025, with a forecast of 138, but a modest increase to 141 in 2026 [7]. - Emerging markets are projected to have an EPS growth of 6% in 2025 and 10% in 2026, with a forecast of 84 and 92 respectively [7].

Investment Rating - The report indicates a shift in the Federal Reserve's approach, with expectations that quantitative tightening (QT) will end soon, particularly at the upcoming October FOMC meeting [12][18][27]. Core Insights - Major banks, including Goldman Sachs and JPMorgan, anticipate that the Fed will halt its QT process due to declining bank reserves, which have fallen below $3 trillion [7][13][21]. - The liquidity situation in the market is deteriorating, with increased borrowing costs and reduced balances in overnight reverse repurchase agreements (ON RRP), indicating greater friction in funding markets [19][22][23]. - The Fed's low tolerance for rate volatility and political pressures are contributing factors for an earlier end to QT, as the central bank aims to avoid past liquidity crises [19][24][25]. Summary by Sections - **Liquidity Conditions**: The report highlights that while overall liquidity remains ample, funding markets are experiencing significant frictions as ON RRP balances have dropped to nearly zero, leading to elevated funding rates [19][22]. - **Fed's Balance Sheet Management**: Analysts expect the Fed to initiate temporary open market operations (TOMO) to alleviate stress in funding markets, followed by reserve management purchases of approximately $8 billion per month starting January 2026 [20][21]. - **Market Reactions and Predictions**: Following recent market turbulence, several banks have revised their forecasts for the end of QT, with many now predicting it will conclude at the October meeting rather than later in the year [27][29][30].

Investment Rating - The report maintains an "Overweight" (OW) rating for Pop Mart (9992 HK) despite recent sell-off pressures [1]. Core Insights - Pop Mart experienced a significant sell-off, dropping 10.6% to a four-month low, despite a strong Q3 sales performance [1][2]. - The sell-off is attributed to a combination of factors including high short-selling activity and competition concerns from other companies like Miniso [2][3]. - There are indications of declining interest from resellers, raising questions about the sustainability of demand for Pop Mart's products [3]. Summary by Sections Sales Commentary - Pop Mart's stock fell significantly, with a notable drop in US ADRs and a high trading volume in Hong Kong [1]. - The stock's turnover reached over HK$9.5 billion, surpassing Alibaba's HK$7.8 billion, indicating heightened trading activity [2]. Market Dynamics - Short-sell turnover for Pop Mart reached a record high of approximately HK$1.99 billion, accounting for 10.8% of the total short-sell turnover in Hong Kong [2]. - The latest short interest data shows approximately 46.8 million shares shorted, representing 6.3% of the float, with a week-over-week increase of 52% and a month-over-month increase of 64.3% [2]. Competitive Landscape - Miniso's Chairman announced plans to transform the company into a leading global IP platform, which may heighten competition concerns for Pop Mart [3]. - Reports indicate a decline in resale prices for Labubu products, which could impact future demand and investor sentiment regarding Pop Mart's revenue growth potential [3].

Investment Rating - The report does not provide a specific investment rating for the healthcare sector or individual companies [3][4][19]. Core Insights - The overall sentiment in the healthcare sector remains positive despite recent geopolitical risks, with companies expressing confidence in business development momentum and healthy order trends [2][5]. - Biopharma companies are optimistic about the sustainability of business development, driven by the attractiveness of Chinese innovative assets, although deal sizes may moderate [5][6]. - Retail pharmacy leaders report continued improvement in same-store sales growth, while hospitals see marginal improvements in service pricing [2][5]. - Device companies face challenges from volume-based procurement, and the consumer healthcare sector is still waiting for a stronger recovery in consumption [2][5]. Summary by Relevant Sections CXO Insights - Companies are expanding capacity outside China and leveraging emerging drug modalities like peptides and siRNA [5]. - WuXi XDC has developed self-developed payloads, enhancing customer retention [5]. - Asymchem anticipates significant revenue growth in chemical macromolecules, projecting revenue to double to around Rmb1 billion by 2025 [5][6]. Biopharma Developments - Hengrui expects innovative drug sales to exceed Rmb15.3 billion in FY25, with a focus on R&D and sales [6]. - Sino Biopharm projects FY25 innovative drug revenue to reach Rmb15 billion, with plans to launch at least five new innovative products annually [6]. - Companies are actively pursuing biosimilar globalization, particularly in Europe and the U.S. [6]. Medical Device Sector - Mindray expects overall revenue growth in 3Q25, with improved overseas performance, although profitability remains under pressure [6][7]. - The domestic market is in a destocking phase, but a normalization in the macro environment is anticipated for 2026 [7]. Retail Pharmacy Trends - Dashenlin's same-store sales have shown a gradual recovery, with M&A activity resuming in 3Q [7]. - Non-pharmaceutical categories are expected to see growth potential, although they are sensitive to consumption trends [7]. Service Sector Insights - Hygeia is adjusting to cost-control policies, with recent price increases in imaging and surgical services [7]. - Aier Eye anticipates revenue growth driven by strong overseas performance and increased patient spending [7].

Investment Rating - The report indicates a positive outlook on the corporate credit cycle, suggesting a shift in momentum with increased M&A and LBO activity, although it starts from a benign point [5][9]. Core Insights - US consumer spending growth is slowing but remains solid, supported by elevated net worth and asset growth outpacing liabilities [43]. - The credit cycle is gaining momentum with busy issuance in both investment-grade (IG) and high-yield (HY) markets, with September IG issuance reaching $227 billion, significantly above seasonal averages [6][43]. - Delinquencies are rising in subprime credit while stabilizing in prime credit, indicating a bifurcation in credit quality [43][23]. Summary by Sections Corporate Credit - The credit cycle is moving up a gear with significant M&A and LBO announcements, although current activity levels are below historical trends [5][9]. - High-yield issuance in September exceeded $55 billion, marking it as the third-largest month on record [7][8]. - Defaults remain elevated despite tighter spreads, with a trailing 12-month default rate for high-yield loans at 4.2% [12][11]. Securitized Credit - There is a notable divergence in delinquency rates between prime and subprime segments, with prime delinquencies stabilizing while subprime delinquencies are on the rise [43][23]. - Transition rates do not indicate further deterioration in credit quality, suggesting a potential stabilization in the market [28]. Economic Overview - Real personal consumption expenditure growth is slowing, but remains robust, particularly among high-income cohorts whose net worth is significantly higher [34][43]. - Labor income growth has decelerated, which may impact real spending in the future [38][43].

Investment Rating - The industry view is rated as Attractive [7] Core Insights - The MS Capex Tracker indicates that US next twelve months (NTM) capital expenditure intentions have accelerated to +20% through Q3, up from +10% at the start of the year, primarily driven by Data Center investments [3][4] - The report highlights a significant positive rate of change in capital expenditure, particularly from US Hyperscalers, which aligns with the "Data Center vs Everything Else" theme [3] - There is potential for manufacturing capital expenditure to increase further into 2026 due to improved tariff policies, supporting the $10 trillion reshoring thesis [3][4] - The report identifies key companies well-positioned for growth, including Trane Technologies (TT), Eaton Corporation (ETN), Johnson Controls International (JCI), Vertiv Holdings (VRT), Rockwell Automation (ROK), and Acuity Inc. (AYI) [3] Summary by Relevant Categories Capital Expenditure Trends - NTM capital expenditure leaders include Hyperscalers (+78%), Tech Hardware (+20%), Utilities (+18%), and Aerospace (+12%) [9] - Laggards in capital expenditure include IT (-14%), Chemicals (-9%), Automotive (-7%), Food & Beverage (-6%), Semiconductors (-4%), and Energy (-3%) [9] Rate of Change in Capital Expenditure - The rate of change for NTM capital expenditure shows leaders such as Hyperscalers (+38%) and Tech Hardware (+20%), while laggards include Chemicals (-16%) and IT (-16%) [12]

Investment Rating - The report maintains a constructive outlook on Asia, particularly favoring emerging markets (EM) over developed markets (DM) equities [2][6]. Core Insights - The liquidity and policy backdrop in Asia remains supportive, with expectations of further monetary easing in China and a favorable environment for EM equities as the Fed enters a rate cut cycle [2][6]. - China's anti-involution policy is expected to stimulate demand, with forecasts indicating a growth slowdown in Q3 and Q4, but a shift towards consumption support is anticipated [6][10]. - Singapore is highlighted as a potential value-up opportunity, with government initiatives aimed at improving shareholder value and market liquidity, particularly for small and mid-cap (SMID) stocks [14]. - The recent India Summit indicated that periods of significant underperformance relative to the MXAP index historically present buying opportunities, with a focus on sectors like financials and infrastructure [18]. Summary by Sections Asia Strategy - The report emphasizes the importance of the Fed's rate cut cycle, predicting a 4-5% downside for the dollar in the next six months, which historically benefits EM equities [2]. - EM equities have outperformed by over 5%/15% in the 6/12 months following the start of a Fed cutting cycle, reinforcing the positive stance on EM Asia equities [2]. China Macro - China's growth forecast for Q3 and Q4 is set at 4.6% and 3.9% year-on-year, respectively, with expectations of fiscal stimulus announcements in late October or early November [6]. - The report suggests that the government will focus on lifting consumption rather than reversing supply-side efforts, creating a favorable cyclical backdrop for Chinese equities [6]. China Positioning - The report notes a potential sideways consolidation in China's equity market due to bubbly margin finance, but highlights positive catalysts such as upcoming meetings between Xi and Trump and the 4th Plenary session [10]. - There is a reduction in hedge fund long/short exposure in China, indicating potential for reinvestment as market conditions improve [10]. Singapore - The Singapore government is pushing for enhanced shareholder value creation, with a focus on improving returns and market liquidity for SMID stocks [14]. - The launch of the SGN50N Index is expected to attract more investment into the SMID segment, supported by the S$5 billion EQDP program [14]. India Summit - The report indicates that historically, when India lags the MXAP by over 20% year-on-year, it is an opportune time to start adding positions [18]. - Key growth drivers for India include steady domestic consumption, improving fiscal and monetary policies, and a resilient economy relative to global export challenges [18].