Asia Pacific LM Strategy 6-Jun-25 Asia Local Markets Strategy Emerging Markets Strategy Michael Loh AC michael.loh@jpmorgan.com JP Morgan Chase Bank, N.A., Singapore Branch See the end pages of this presentation for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity ...

Investment Rating - The report maintains a firm floor for Brent crude prices in the range of $55-60 and WTI prices in the range of $50-55 [5] Core Insights - Global oil demand increased by 400 thousand barrels per day (kbd) in May, averaging 103.6 million barrels per day (mbd), although this was 250 kbd below expectations [5] - Total liquid inventories globally built by 10 million barrels (mb) in May, with crude oil stocks rising by 3 mb and oil product inventories increasing by 7 mb [5] - The report anticipates a 2.6 mbd surplus in crude oil by the fourth quarter of 2025, driven by rising OECD inventories and a flattening crude curve [5] Oil Market Analysis - Front-month crude prices remain resilient despite accelerated OPEC supply hikes [5] - Five conditions are identified for crude prices to reflect year-end weakness, with expectations that only two will occur: a surge in OECD inventories and a flattening crude curve [5] - Limited potential for run increases due to refinery closures in the US and Europe, capacity constraints in Russia, and export restrictions in China [5] Agricultural Market Insights - The USDA's June 12 WASDE report is viewed as a major bullish event risk for CBOT Corn prices, with a significant increase in US corn export targets [6] - US wheat export sales remain competitive, prompting an increase in old crop US wheat exports [6] - A tighter US cotton balance is expected due to rising export demand [6] Natural Gas Market Dynamics - The European natural gas market is influenced by supply factors following the decline in Russian pipeline flows, with a focus on demand dynamics [7] - The report introduces a European natural gas demand and storage tracker to monitor weekly demand and storage dynamics in key regions [7] LNG Trade Forecast - Global LNG trade in May 2025 reached 47.4 billion cubic meters (Bcm), with a year-to-date volume of 244.8 Bcm, reflecting a 3.4% year-over-year increase [8] - The forecast anticipates a growth of around 5% in global LNG trade for the full year 2025, reaching 589 Bcm [8] Commodity Market Positioning - The estimated value of global commodity market open interest declined by 3% week-over-week, driven by outflows in the gold market and weakness in energy prices [9] - Cumulative flows for 2025 have returned to 10-year average levels [9] Rig Activity Trends - The downward trend in US rig activity continues, with a decrease of nine oil rigs this week, particularly in the Permian and Eagle Ford basins [10] - The pace of rig attrition in the Permian is surpassing earlier projections, leading to a downward revision of 2025 Permian crude and condensate output [10] Price Forecasts - The report provides quarterly and annual price forecasts for various commodities, including WTI and Brent crude, natural gas, base metals, and precious metals [13]

Investment Rating - The report assigns an "In-Line" investment rating for the China Autos industry [4]. Core Insights - The report forecasts 28.3 million units of passenger vehicle (PV) sales in China for 2025, representing a 3% year-over-year increase, and 14.9 million units of new energy vehicle (NEV) sales, which is a 21% year-over-year increase [9][13]. - The penetration of NEVs is expected to reach 15.6% by April 2025, indicating a growing trend in the adoption of electric vehicles [21]. - The report highlights that local brands are continuing to gain market share from foreign brands in the PV market [50]. Summary by Sections Market Overview - The report estimates that the wholesale volume of PVs in China will grow from 26.0 million units in 2023 to 28.3 million units in 2025, with a projected growth rate of 3% in 2025 [13]. - NEV wholesale volume is expected to increase significantly, with estimates of 14.9 million units in 2025, reflecting a 22% growth rate [14]. Sales and Production Forecast - The report projects that domestic PV sales will remain relatively stable, with a slight decrease expected in 2026 [13]. - Export sales are anticipated to grow significantly, with a forecast of 5.7 million units in 2025, marking a 15% increase year-over-year [13]. Competitive Landscape - The report notes intensifying competition in the China EV market, with local brands gaining share from foreign brands [45]. - Tech heavyweights are increasingly entering the market, partnering with local OEMs to develop smart EVs and autonomous driving solutions [47][48]. Technological Advancements - The forecast for L2+ autonomous driving penetration has been raised to 25% in 2025, indicating advancements in autonomous vehicle technology [16][18]. - The report emphasizes the importance of collaborations among OEMs to enhance innovation and reduce costs in vehicle development [67]. Export Dynamics - Asia and Europe accounted for more than 65% of China's vehicle exports in the year-to-date 2025, highlighting the significance of these markets for Chinese automakers [54]. - The report outlines planned capacity expansions for several OEMs in various international markets, indicating a strategic focus on global expansion [62].

Investment Rating - The report maintains a bearish outlook on the US dollar due to moderating US exceptionalism and a more growth-supportive monetary and fiscal mix overseas [6][11][14]. Core Insights - The report highlights that while tariffs remain a headwind for global growth, several currencies such as Antipodeans, NOK, EUR, and JPY are expected to turn the corner on growth [6][11]. - In developed markets (DM), the bearish USD recommendations are barbelled for either a US slowdown (long JPY) or a soft landing scenario (long Scandis, Antipodean, EUR) [6][11]. - In emerging markets (EM), there is a broadening overweight across regions with a preference for Asian creditor currencies (like KRW) and CEE euro-proxies (like CZK) [6][11]. - The report emphasizes that 2025 is different from previous years as no single factor is dominating global FX returns, necessitating a separate analysis of G10 and EM [6][11][24]. - G10 FX forecasts remain unchanged for EUR/USD at 1.22 and USD/JPY at 139, with upgrades for GBP, NZD, and CAD based on improved domestic prospects [6][11][48]. - EM forecasts include a reduction for USD/CNY to 7.15 and USD/ZAR to 17.50, reflecting a more favorable outlook for these currencies [6][11][48]. Summary by Sections Key Currency Drivers - The report identifies several macroeconomic factors influencing FX returns, including US-China trade talks and tariff adjustments [7][8]. - It notes that the reduction of tariffs from 145% to approximately 41% for a 90-day period is a significant development [7][8]. FX Models - The report discusses the performance of various currencies and highlights that the best-performing currencies are often those with current account surpluses [24][25]. - It also notes that the carry-to-value rotation is finally playing out in G10, with surplus countries outperforming [24][25]. G10 FX Short-term Fair Value - The report maintains forecasts for major currency pairs, with a bullish bias on EUR and JPY due to US moderation [56]. - It also highlights that GBP and NZD forecasts have been upgraded based on growth resilience and improved domestic conditions [56]. Technicals - The report indicates that external balances, particularly current account surpluses, have been among the best signals for global FX returns this year [24][25]. - It emphasizes that equity momentum has been a strong strategy for G10 currencies, benefiting from lower policy activity among central banks [24][25]. Trade Recommendations - The report suggests rotating AUD/USD into a long AUD and NZD basket against USD, citing improved domestic prospects for New Zealand [41][56]. - It also recommends an overweight position in EM currencies, particularly in Asia and EMEA, while remaining selective in commodity and frontier markets [23][56].

Investment Rating - The report maintains an "Overweight" (OW) rating for several companies including Genscript Biotech, Innovent Biologics, Kingdee International, and Zhongsheng Group Holdings [32][46][50][53]. Core Insights - The A-share SMid indices, particularly the micro-cap CSI2000, have outperformed the CSI300 year-to-date (YTD), with CSI2000 rising by 12.9% compared to CSI300's 0.2% [2][3]. - High-beta micro-caps have benefited from robust trading volumes and less national team ownership, leading to increased retail trading interest [3][4]. - The outlook for 2Q25 suggests a range-bound trading environment for MXCN, with potential upside driven by trade negotiations and possible reforms in China [4][8]. Summary by Sections Market Performance - The micro-cap CSI2000 has outperformed other indices, with H shares rising by 15% to 18% in USD terms compared to the flat performance of onshore indices [2][3]. - The consensus EPS for SMids has faced significant downgrades, with declines of 13% and 17% for CSI500 and CSI1000 respectively [8][16]. Sector Analysis - Defensive sectors such as Healthcare, Utilities, and Consumer Staples have performed well, while Real Estate and IT lagged behind [8][25]. - Healthcare and IT remain preferred themes, with expectations for biotech shares to benefit from improved policy outlooks and AI adoption in IT [8][25]. Company-Specific Insights - Kingdee International has seen a 51% increase in shares YTD, supported by AI adoption [10]. - Innovent's shares have surged by 98% YTD, driven by strong product sales and potential for significant revenue growth from new drugs [10]. - Genscript is expected to achieve a 45% CAGR from 2024 to 2026, with profitability anticipated in 2026 [10].

Investment Rating - The report maintains an Overweight (OW) rating on US stocks, Treasuries, and US Investment Grade Corporate Credit, while recommending a focus on quality assets [4][5][6]. Core Insights - The report highlights a global growth slowdown due to the imposition of tariffs by the US, which is expected to impact demand and supply dynamics across various regions [2][8]. - Despite the anticipated slowdown, the report does not foresee a global recession, citing a strong starting point for growth entering the year [2]. - The US GDP growth is projected to decline from 2.5% in 2024 to 1.0% in both 2025 and 2026, with global growth expected to decrease from 3.5% to 2.5% in the same period [2][9]. Economic Outlook - The report anticipates a step-down in global growth, with specific forecasts indicating a 2.5% growth rate for 2025 and 2.8% for 2026 [9]. - Inflation rates are projected to be 2.1% for global inflation in 2025 and 2.0% in 2026, with the US expected to see inflation rates of 3.0% and 2.5% respectively [9]. Sector Recommendations - In the US, the report favors quality cyclicals, large caps, and defensives with lower leverage and cheaper valuations [6]. - For Japan, the focus is on domestic reflation and corporate reform beneficiaries, as well as companies involved in defense and economic security spending [6]. - In Europe, the report suggests repositioning into resilient sectors such as defense, banks, software, telecoms, and diversified financials [6]. - Emerging Markets (EM) recommendations are skewed towards financials and domestic-focused businesses over exporters and semiconductors/hardware [6]. Equity Valuations - The report provides specific price targets and earnings per share (EPS) estimates for major indices, including S&P 500 at 6,000 with a target of 6,500, and MSCI EM at 1,183 with a target of 1,200 [7]. - The expected EPS growth for S&P 500 is +7% for 2025 and +9% for 2026, while MSCI EM is projected to grow by +6% in 2025 and +10% in 2026 [7]. Currency and Interest Rate Forecasts - The report predicts a depreciation of the USD, with the DXY expected to fall by 9% to 91 by mid-2026 due to converging US rates and growth with global peers [14]. - US Treasury yields are expected to remain range-bound until late 2025, with significant rate cuts anticipated in 2026 [14][21]. Commodity Insights - Oil prices are expected to face downward pressure due to potential supply increases, with Brent prices projected to drop into the mid-$50s by 1H26 [16]. - Gold is highlighted as a top pick due to strong central bank demand and safe-haven appeal amid growth concerns [18].

June 8, 2025 09:17 PM GMT China Equity Strategy | Asia Pacific 1Q25 Earnings Final Cut for MSCI China –Encouraging Second Consecutive In-Line Quarter Sector observations: Real Estate recorded a net beat by both number of companies and by weighted earnings. Communication Services, Consumer Discretionary, Consumer Staples, Financials, and Healthcare delivered a net beat by either number of companies or weighted surprise. Energy, IT and Utilities delivered a net miss by number of companies and in-line results ...

June 9, 2025 04:01 AM GMT AppLovin Corp | North America It's More Valuable Without the Apps | What's Changed | | | | --- | --- | --- | | AppLovin Corp (APP.O) | From | To | | Price Target | $420.00 | $460.00 | We are bullish on APP's plan to sell its apps segment, which we expect would enhance shareholder value and be neutral to future earnings. By effectively shifting profits to the higher multiple ad segment, we believe APP would actually be more valuable without its 1P games. Remain OW, PT to $460. Key T ...

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - Core CPI showed a modest improvement, with a year-on-year increase of 0.1 percentage points to 0.6% and a month-on-month improvement to 1.2% SAAR, indicating a recovery since the policy pivot in September 2024 [2] - PPI deflation pressures continue, with a month-on-month decline of 0.4% for three consecutive months, leading to a year-on-year decrease of 3.3% [3] - Weak energy prices have significantly impacted both headline CPI and PPI over the past three months, while core prices remain resilient due to targeted policies [6] Summary by Sections Consumer Price Index (CPI) - In May 2025, the CPI year-on-year was -0.1%, with food prices down by 0.4% and non-food prices stable at 0.0% [5] - Core CPI (excluding food and energy) was at 0.6%, reflecting a slight increase from previous months [5] Producer Price Index (PPI) - The PPI year-on-year was reported at -3.3%, with notable declines in producer goods (-4.0%) and mining and quarrying (-11.9%) [5] - Durable goods prices turned positive month-on-month, driven by the automotive sector, although this may not fully reflect recent price cuts [3][5] Key Drivers - The resilience in core prices is attributed to targeted policies such as the consumer goods trade-in program, while a supply-demand imbalance persists [6] - The renewed competition in the automotive sector may not have been adequately captured in the current readings, indicating potential volatility in future reports [6]

Investment Rating - The report maintains a bearish view on the USD, recommending short positions against CLP, TRY, and KRW [10][20]. Core Insights - The report expresses cautious optimism for major Latin American economies, particularly favoring Brazil's rates while indicating that Mexico's valuations are less attractive [3]. - In Asia, the report anticipates that USD weakness will support AXJ currencies, although gains may be tempered by slowing global trade [4]. - The report expects EM bonds to deliver decent total returns but to underperform Treasuries, with EM currencies gaining against the USD but lagging behind other safe havens [5][64]. Summary by Sections Latin America - The report highlights Brazil's nominal and real rates as favorable, while expressing caution regarding Mexico's valuations [3][62]. - A short USD/CLP position is recommended due to strong macroeconomic fundamentals and potential political developments [48][51]. Asia - The report suggests that AXJ currencies will appreciate due to USD weakness, with a focus on idiosyncratic stories amid potential shifts in monetary and fiscal policies [4][67]. - Long KRW positions are favored based on supportive macro factors, despite acknowledging risks of a near-term rebound in USD/KRW [35][39]. Global EM Fixed Income - The report anticipates a rally in EM fixed income, driven by a disinflation process across regions, although it notes significant uncertainty in the US and a global economic slowdown [5][64][68]. - It projects local currency index bond yields to drop around 20 basis points by year-end, with expectations for US Treasuries to fall by about 50 basis points [21][22].