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Investment Rating - The report does not explicitly provide an investment rating for the industry Core Viewpoints - Concerns over supply shortages have led to a surge in oil prices, but the impact on Asia is expected to be manageable due to lower oil burdens and moderate inflation [1][9] - If oil prices remain above $85 per barrel and the dollar continues to strengthen, it may delay interest rate cuts in the region [1][9] - Countries like Thailand, South Korea, and India face greater growth downside risks due to larger oil and gas trade deficits [3][9] Summary by Sections Oil Price Impact - The report estimates that a $10 increase in oil prices could raise Asia's CPI and current account balance by 40 basis points [8][36] - Asia's oil burden is currently below its long-term average, with projections indicating it could drop to 2.8% of GDP if oil prices average $75 per barrel [14][15] Trade Balance - Asia is the most oil-import dependent region, with oil accounting for 25% of its energy needs, and 80% of oil demand met through imports [10][12] - As of April 2025, Asia's oil and gas trade balance was -2.4% of GDP, compared to -1.7% for the Euro Area and 0.04% for the US [10][13] Macroeconomic Stability - Current macroeconomic indicators in Asia show good stability regarding inflation and current account balances [22] - Inflation is projected to rise slightly with oil price increases, but most economies are within central banks' comfort zones [22][36] Central Bank Policies - The report discusses how rising oil prices may influence monetary policy across different countries, with varying degrees of sensitivity to inflation and growth risks [47][48] - Countries like Australia and India may maintain a dovish stance despite rising oil prices, while the Philippines faces the highest risk due to its significant oil price exposure [49][52]

Investment Rating - The report rates TSMC as a "Top Pick" with an "Overweight" rating [4][67]. Core Insights - TSMC is expected to increase global wafer prices by 3-5% on average in 2026, driven by strong AI demand, which may offset the negative impact of foreign exchange fluctuations [1][32]. - The stock has risen 31% over the past three months, but concerns remain regarding its underperformance compared to NVIDIA, which has increased by 53% in the same period [1][23]. - The report anticipates a 20% year-over-year revenue growth in 2026, with capital expenditures remaining flat at US$40 billion [2][50]. Summary by Sections Investment Outlook - TSMC's price target remains NT$1,288, indicating a 25% upside from the current price of NT$1,030 [4][67]. - The expected EPS for 2026 is NT$64.61, with a P/E ratio projected at 15.9 [4][67]. Financial Performance - TSMC's gross margin is expected to be between 55-56% in 2025 due to the impact of TWD appreciation, which affects margins by 40 basis points for every 1% change [2][25]. - The report revises the EPS estimates for 2025 and 2026 down by 6% and 12%, respectively, due to foreign exchange impacts [2][28]. Market Dynamics - The demand for TSMC's 2nm node is projected to be strong, with capacity expected to reach 90kwpm by the end of 2026 [53][59]. - AI revenue is anticipated to grow at a mid-40% CAGR, contributing approximately 34% of TSMC's total revenue by 2027 [41][50]. Strategic Developments - TSMC is expected to benefit from Intel's outsourcing of CPU production, which could account for 33% of Intel's COGS by 2025 [64][66]. - The company is also positioned to capture demand from the Chinese AI market, contingent on regulatory approvals for shipping AI GPUs [41][50].

Investment Rating - The report does not explicitly provide an investment rating for the industry or the RMB internationalization efforts Core Insights - The People's Bank of China (PBoC) is advocating for the internationalization of the RMB and a multipolar global financial system, emphasizing the need for securing international transactions over enjoying the benefits of a reserve currency [2][8] - Eight new financial policies have been announced to facilitate the opening of China's financial system and promote the use of RMB internationally [3][8] Summary by Sections PBoC's Remarks - PBoC Governor highlighted the tension between self-interest and global public goods, the spillover of domestic policy, and the weaponization of currency in geopolitical competition [2] - The focus is on securing cross-border settlements rather than the "exorbitant privilege" of a reserve currency [2] Financial Policies - The PBoC announced eight financial measures aimed at enhancing RMB internationalization, which include establishing a trade reporting system, setting up an international digital RMB operation center, and promoting RMB FX futures trading [5][6] - The measures also aim to enrich financial products and services in the Shanghai Free Trade Zone and enhance Shanghai's role as a financial center [6][8] Economic Context - The wider international use of RMB is contingent upon a robust economy and progress in capital account convertibility [3] - To restore global confidence in growth, Beijing needs to address deflation and increase the supply of central government bonds [3]

Investment Rating - The report maintains an Overweight (OW) rating on Broadcom (AVGO) and Marvell (MRVL) [35][49]. Core Insights - The high-end custom ASIC chip market is projected to reach $30 billion by CY25, growing at a 30% CAGR, driven by the aggressive adoption of AI technologies [5][11]. - Broadcom and Marvell are positioned as market leaders, holding 55-60% and 15% market shares respectively, and are expected to dominate the ASIC market due to their strong design capabilities and extensive customer pipelines [8][11]. - The demand for custom ASICs is increasing as cloud/hyperscale companies seek differentiation, better performance, and lower costs compared to off-the-shelf solutions [9][11]. Summary by Sections Market Opportunity - The high-end ASIC market is estimated to be a $30 billion opportunity with a 30% CAGR, primarily fueled by the demand for AI compute accelerators [5][11]. - Custom AI ASICs are expected to account for 40% of the AI XPU/GPU market this year, indicating a significant shift towards custom solutions [19]. Company Performance - Broadcom is on track to generate approximately $19.5 billion in AI revenues this fiscal year, with expectations to exceed $31 billion next fiscal year, reflecting a 60% year-over-year growth [5][9]. - Marvell is ramping production of its first two AI ASIC programs and is projected to achieve $4 billion in AI revenue this year, up from $1.8 billion last year [10][11]. Design and Technology - Both Broadcom and Marvell possess advanced design capabilities, including the ability to handle complex chip designs with over 100 billion transistors, which is a key differentiator in the market [6][20]. - The emergence of custom ASICs is driving demand for EDA software and critical IP, benefiting companies like Synopsys, Cadence, and ARM [7][11]. Customer Engagement - Broadcom and Marvell have secured significant design wins with major cloud/hyperscale customers, ensuring a strong pipeline for future growth [23][32]. - The report highlights the collaborative nature of ASIC development, where cloud titans partner with semiconductor companies to leverage their design expertise and manufacturing capabilities [8][20].

June 13, 2025 05:00 AM GMT US Economics Weekly | North America Weakness still lies ahead This week's inflation data showed no clear signs of a tariff push, but we expect higher goods inflation in coming months. Slower core services may give the Fed confidence that the inflation pickup will be transitory. With higher inflation ahead, weaker consumption growth is still in front of us. | M | | | | --- | --- | --- | | | | Idea | | June 13, 2025 05:00 AM GMT | | | | US Economics Weekly North America | Morgan Sta ...

Investment Rating - The investment rating for the Semiconductor Production Equipment industry is Attractive [1]. Core Insights - The semiconductor production equipment industry is experiencing a shift in the silicon cycle, driven by advancements in generative AI and significant capital expenditures from major tech companies [4][5]. - Companies like Microsoft and Google are making substantial investments in AI, which is expected to boost demand for semiconductor production equipment, particularly for high-bandwidth memory (HBM) and advanced packaging technologies [5]. - The report highlights the increasing need for GPUs in AI servers, which in turn drives demand for HBM and advanced packaging solutions [5]. Industry Drivers and Equipment Impact - The report identifies key investment themes such as EUV (Extreme Ultraviolet Lithography), GAA (Gate-All-Around), and advanced packaging technologies that are expected to drive growth in the semiconductor production equipment sector [13]. - Specific equipment types are categorized based on their relevance to these investment themes, indicating a positive outlook for steppers and coater/developers in the context of generative AI and HBM [13]. Market Size and Share - The report provides detailed market size and share data for various segments within the semiconductor production equipment industry, including lithography, etching systems, and cleaning equipment, with notable market leaders identified [72][78][80][83]. - For instance, ASML holds a dominant market share of 94% in the lithography equipment segment, while Tokyo Electron leads in coater/developer equipment with a 93% market share [72][78]. Future Outlook - The report anticipates a ramp-up in capital expenditures directed at HBM4 starting from the second half of 2025, indicating a bullish outlook for the semiconductor production equipment market [5]. - The introduction of new technologies such as glass substrates and photoelectric fusion is also expected to enhance the capabilities and efficiency of semiconductor production processes [5].

J P M O R G A N North America Emerging Markets Research 13 June 2025 EM Flows Weekly Scaling new heights: EM bond funds see inflows surpass last week's yearly high EM Flows Weekly includes fund flow data, non-resident EM portfolio flow data, weekly retail fund flow models, EM-dedicated retail bond fund beta trackers, and historical cross-asset fund flows. – Within local currency, EM ex-China saw inflows of +$314mn (from + $375mn), while China-focused funds saw outflows of -$15mn (from +$27mn). – Within hard ...

Investment Rating - The report provides a neutral (N) rating for RemeGen and Junshi Biosciences, with price targets of Rmb 63 and Rmb 35 respectively [20][24]. Core Insights - The recent stock price rallies of RemeGen and Junshi are attributed to their developments in PD-1xVEGF bispecific antibodies (bsAbs), with RemeGen's stock jumping approximately 18% and Junshi's by about 6% on June 12, 2025 [2]. - RemeGen's potential out-licensing deal for telitacicept and ongoing trials for RC178 are key drivers of investor interest, while Junshi's JS207 is undergoing multiple Phase 2 trials, indicating strong market expectations for both companies [5][6]. Summary by Sections RemeGen - RemeGen's stock performance is driven by expectations of a telitacicept out-licensing deal and positive clinical data presentations at the ERA Congress 2025 [5]. - The company is advancing its Phase 3 trial for telitacicept in IgAN, with potential approval in China anticipated [5]. - RemeGen has initiated a Phase 1 trial for RC178, a PD-1xVEGF bsAb, with over 100 patients enrolled and ongoing Phase 2 trials in NSCLC [5][6]. Junshi Biosciences - Junshi's stock sentiment is influenced by the ongoing trials of its PD-1xVEGF bsAb, JS207, which is in several Phase 2 trials [6]. - Management suggests that JS207 has shown comparable efficacy to other bsAbs and may have a better safety profile based on Phase 1 data [6]. - Junshi is exploring a broader range of indications in its Phase 2 trials compared to RemeGen, with potential registrational trials for JS207 expected in late 2025 or early 2026 [6]. Comparative Analysis - Both RemeGen and Junshi are developing PD-1xVEGF bsAbs, with market expectations for out-licensing opportunities [6]. - RemeGen may have slightly more clinical data available than Junshi, but Junshi is exploring a wider range of indications in its trials [6]. - The business development potential for both companies will largely depend on the clinical efficacy and safety of their respective products [6].

Investment Rating - The report does not explicitly state an investment rating for the industry, but it suggests a neutral stance on basis exposure due to weak near-term demand outlook and macro uncertainties [36]. Core Insights - The demand for conventional MBS is muted, with overseas investors likely holding a similar amount of conventionals and Ginnies, contrary to common assumptions [3][25]. - CMO issuance has significantly increased, representing approximately 34% of MBS issuance year-to-date compared to just 9% in 2020-2021, indicating a shift in market dynamics [9][18]. - The GSEs may expand their investment portfolios, which could bridge the gap until bank demand returns, potentially tightening mortgage basis [30][36]. Market Recap - Rates have rallied sharply due to weak inflation and jobless claims, with CPI and PPI coming in below expectations [10]. - Mortgage spreads have not tightened consistently due to opportunistic buying from marginal buyers, particularly overseas investors [21]. Demand and Supply Dynamics - The report highlights that overseas investors have been quieter this year, impacting the demand side of the equation [21]. - Servicing transfer volumes have decreased, but in-the-money loans tend to have faster speeds post-transfer [9]. - The GSEs' retained portfolios have a significant gap compared to regulatory caps, which could lead to increased investment in mortgages if the GSEs focus on generating earnings [30][31]. Investor Composition - The estimated composition of conventional MBS holders includes 26% Fed, 33% US Banks, 10% Overseas, 27% Money Managers, 1% GSEs, and 3% REITs [27]. - For Ginnie MBS, the composition is 17% Fed, 37% US Banks, 31% Overseas, and 15% Money Managers [29]. CMO Issuance Trends - CMO issuance has averaged $32 billion per month this year, driven by demand for floaters as investors seek to minimize duration risk [18]. - The report notes that CMO issuance levels have decoupled from overall MBS issuance, which remains muted [21]. Regulatory Considerations - Potential changes to LLPAs could tighten the credit box for existing low-credit borrowers, benefiting the prepayment profile of credit-impaired stores [44].