Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report highlights a significant liquidity influx into the A-share market, amounting to approximately 1.5 to 1.7 trillion RMB in the first half of 2025, driven by both institutional and retail investors [8][9] - The narrative around the market is shifting, with a focus on policy adjustments to combat deflation and improve economic conditions, particularly through measures that enhance social welfare and stimulate demand [18][19] - The report emphasizes the importance of structural reforms to address systemic overcapacity and the need for a balanced approach to economic recovery [68][77] Summary by Sections Market Liquidity - The Morgan Stanley Free Liquidity Index turned positive in June 2025, indicating improved market conditions [8] - Net inflows into the A-share market from institutional and retail investors reached 1.5 to 1.7 trillion RMB in the first half of 2025 [9] Policy and Economic Outlook - The report discusses the government's deepening understanding of deflation and the resulting policy shifts aimed at stimulating the economy [18] - It notes that the "924" policy shift and other measures are expected to foster a more favorable economic environment [19] Structural Reforms - The report stresses the necessity for structural reforms to mitigate overcapacity issues and enhance market efficiency [77] - It suggests that a market-oriented approach combined with structural reforms is essential for sustainable economic recovery [68] Emerging Industries - The report identifies significant growth potential in emerging industries, particularly in AI and robotics, with predictions of substantial market expansion by 2050 [59][63] - It highlights China's competitive advantages in AI and robotics, with a notable increase in patent applications in humanoid robots and autonomous driving technologies [53][63]

Investment Rating - The semiconductor industry is rated as "Overweight" (OW) for several key companies including AVGO, ADI, MRVL, KLAC, SNPS, and CDNS, with a focus on AI ASIC semiconductors and rising chip design complexity [4][11][12]. Core Insights - The semiconductor industry is projected to grow to a $680 billion market by CY25, with a compound annual growth rate (CAGR) of 7-8% driven by increased demand from sectors such as cloud datacenters, electric vehicles (EV), Internet of Things (IoT), and artificial intelligence (AI) [10][11]. - The custom chip (ASIC) market is experiencing a resurgence, with a projected $30 billion opportunity in CY25, growing at a CAGR of over 30% [18][11]. - The semiconductor sector has shown strong stock performance over the past 20 years, outperforming the S&P 500 index significantly [6][7]. Market Positioning and Intelligence - The semiconductor sector has outperformed the market over various time frames, with the SOX index showing a 29% CAGR over three years and 24% over ten years [7]. - The industry is witnessing lower cyclicality due to end-market diversification and disciplined supply growth, which enhances profitability and free cash flow [10][11]. - Earnings revisions have been positive for approximately 80% of covered semiconductor companies, indicating a strong recovery trend [12][11]. Key Takeaways from Management Access Forum - Continued strong spending in AI and datacenter sectors is expected, driven by hyperscale capital expenditures [16]. - The custom ASIC landscape is diversifying, which is beneficial for the semiconductor value chain [16]. - Companies like Broadcom and Marvell are positioned to dominate the custom ASIC market, with Broadcom expected to generate over $20 billion in AI revenues in CY25 [18][11]. Growth Opportunities - The scale-up networking market is anticipated to reach nearly $25 billion by 2029, with significant growth expected in switching chips [39][35]. - The semiconductor industry is focusing on advanced technologies such as 2nm and 3nm chip designs, which are critical for future growth [20][27]. - Broadcom and Marvell are actively engaging in next-generation ASIC programs, which are expected to ramp up production significantly in the coming years [25][21].

Investment Rating - The report maintains an equal-weight rating on equities, overweight in core fixed income, and underweight in other fixed income [3][4]. Core Insights - The US labor market is showing signs of downside risks, with employment growth moderating faster than expected, leading to a forecasted decline in real GDP growth from 2.5% in 2024 to 1.0% in 2025 [1][7]. - Global growth is expected to decrease from 3.5% in 2024 to 2.6% in 2025, influenced by tariff impacts and trade tensions [1][7]. - The report suggests a focus on quality assets amid growth and tariff risks, favoring quality cyclical stocks and investment-grade credit over high-yield credit [3][5]. Economic Forecasts - The US GDP growth is projected at 1.0% for 2025 and 1.1% for 2026, with inflation expected to be 3.0% in 2025 and 2.5% in 2026 [9]. - The Euro Area GDP growth is forecasted at 1.0% for 2025 and 1.1% for 2026, with inflation at 2.1% and 1.8% respectively [9]. - Japan's GDP growth is expected to be 0.4% in 2025 and 0.6% in 2026, with inflation at 2.1% and 1.7% [9]. - Emerging Markets (EM) are projected to grow at 3.8% in 2025 and 4.4% in 2026, with inflation at 1.6% and 1.9% [9]. Sector Recommendations - In the US, the report recommends positioning in quality cyclicals, large caps, and defensives with lower leverage and cheaper valuations [5]. - For Japan, the focus is on domestic reflation and corporate reform beneficiaries, as well as defense-related spending [5]. - In Europe, key sectors for overweight positions include defense, banks, software, telecoms, and diversified financials [5]. - In Emerging Markets, the preference is for financials and profitability leaders, particularly domestic-focused businesses [5]. Market Dynamics - The report indicates that US markets remain unmatched in size and liquidity, but rising policy uncertainty may pressure the dollar as foreign investors increase FX-hedging ratios [3][12]. - The anticipated Fed rate cuts in 2026 are expected to influence Treasury yields, with 10-year Treasury yields projected to reach 4.00% by the end of 2025 [12][13].

Investment Rating - The report indicates a positive outlook for the humanoid robotics industry, driven by advancements in technology and increasing applications across various sectors. Core Insights - The 2025 World Robot Conference showcased a significant presence of startups, with approximately 80% of exhibitors being newly established companies, highlighting innovation in the robotics sector [1][4] - Dexterous hand products emerged as a key highlight, with five-finger dexterous hands expected to replace traditional grippers, leading to a substantial increase in adoption and sales in the second half of 2025 [1][5] - The application scenarios for humanoid robots are diverse, spanning industrial tasks, commercial management, service roles, and educational purposes, facilitated by advanced visual language action models [1][6][7] - Government support plays a crucial role in the development of humanoid robotics, with the establishment of intelligent robot centers and emphasis on technological achievements, which is vital for industry growth and public engagement [1][8] Summary by Sections Industry Overview - The conference featured over 200 companies, including nearly 60 robotics integrators, showcasing more than 150 new products, indicating a robust growth trajectory in the robotics market [2] Emerging Technologies - Notable trends include the rise of dexterous hands and the integration of tactile sensors, enhancing interaction capabilities with physical objects, and local suppliers competing in the high-precision components market [5] Application Scenarios - Humanoid robots are utilized in various environments, including industrial settings for repetitive tasks, commercial spaces for product management, and service industries for tasks like laundry folding [6][7] Government Role - The government is instrumental in fostering the humanoid robotics sector, with initiatives aimed at establishing a strong value chain and increasing public awareness, thereby solidifying China's leadership in this field [8] Public Engagement - New facilities in Beijing promote public interest in smart technologies through interactive experiences and demonstrations, contributing to the broader adoption of robotics [9]

Investment Rating - The report indicates that the overall USD positioning remains net short despite some covering of shorts in recent weeks [7][12]. Core Insights - USD shorts were covered through July, but the demand for USD puts has softened, indicating a potential shift in market sentiment [7][12]. - There are signs of re-engagement with USD downside, particularly following the Non-Farm Payroll (NFP) data, with notable activity in EUR/USD [7][12]. - In the G10 space, JPY positioning appears relatively clean for re-entering USD shorts, suggesting potential opportunities for investors [7][12]. - The USD Trade-Weighted Index (TWI) continues to track US equity inflows, which have shown signs of consolidation and a modest rebound [7][30]. - There are indications that EUR/GBP longs may be trimmed following the Bank of England meeting, while demand for EUR/CHF topside is rebounding [7][30]. Summary by Sections USD Positioning - USD shorts have been covered in recent weeks, with approximately two-thirds of the net-USD short unwound, yet it remains at -0.4-sigma compared to five-year averages as of August 5 [12]. - The demand for USD downside in options has moderated, but recent data suggests renewed interest in USD shorts post-NFP revisions [12]. FX Volumes - FX volumes have been declining, with total FX turnover trending lower, except for a spike in early July [9][30]. - The average number of daily FX options transactions has continued to soften since April, aligning with two-year averages [9]. EUR and JPY Positioning - Large EUR call demand indicates a re-engagement with the dollar-lower theme, particularly after weaker payroll numbers [12][19]. - JPY positioning against USD looks cleaner compared to other currencies, suggesting more scope for re-engagement [12][18]. Equity Inflows and Currency Trends - The USD TWI has shown a slight increase, coinciding with a rebound in US equity ETF inflows, which moderated significantly in Q2 but has improved in Q3 [30][31]. - The relative flow of US and European equity ETFs indicates a similar trend for EUR/USD, with strong demand for European equities earlier in the year now moderating [30][32].

Investment Rating - The report reiterates Tencent Holdings Ltd. as a "Top Pick" with an "Overweight" rating and raises the price target from HK$650.00 to HK$700.00, implying a 19% upside potential from the current price of HK$586.00 [1][6][48]. Core Insights - The successful deployment of AI across all business lines is expected to drive solid revenue growth, alleviating concerns about margin pressure from AI investments due to a favorable mix shift [1][12]. - The report highlights a strong performance in the second quarter (2Q), with revenue growth of 14.5% year-over-year, driven by significant contributions from online games and advertising [19][17]. - The management's focus on tracking AI effectiveness through various metrics indicates a strategic approach to leveraging AI for business growth [3][12]. Summary by Sections Financial Performance - Tencent reported a 2Q revenue of Rmb184.5 billion, a 14.5% increase year-over-year, with online games growing by 22.1% and advertising revenue increasing by 19.7% [17][19]. - Gross profit margin reached a record high of 56.9%, reflecting a 3.6 percentage point increase year-over-year [19][17]. - Non-IFRS operating profit grew by 19%, beating estimates, while net profit increased by 16.8% year-over-year [19][17]. Capital Expenditure and Growth Projections - The company maintained its capital expenditure guidance at a low teens percentage of total revenue for 2025, estimating Rmb97 billion for the year [2][3]. - Expectations for 3Q revenue growth are set at 12%, with non-IFRS operating profit growth projected at 14% [3][12]. Game and Advertising Segments - The gaming segment is expected to continue its momentum, with a projected 16% year-over-year growth in 3Q, driven by the launch of Valorant Mobile and strong performance from existing titles [4][3]. - Advertising revenue is anticipated to grow by 20% in 3Q, supported by successful AI ad technology deployment [4][12]. Valuation and Investment Strategy - The price target of HK$700 is derived from a sum-of-the-parts valuation, with HK$613 attributed to core businesses and HK$87 to associate investments, applying a 30% discount to investment value [38][39]. - The report emphasizes Tencent's position as a leading AI adopter with high ROI potential, particularly in consumer-facing AI applications [12][39].

Investment Rating - The report maintains a cautious outlook on the US labor market and global growth, indicating a potential step-down in real GDP growth for the US from 2.5% in 2024 to 1.0% in 2025 [2][7]. Core Insights - The report highlights that US employment growth is moderating faster than expected, signaling downside risks to the labor market [2]. - It anticipates a rise in core goods inflation, projecting the core CPI inflation rate for July to reach 3.04% year-over-year [2]. - Global growth is expected to decline from 3.5% in 2024 to 2.6% in 2025, influenced by tariff shocks and restrictive trade policies [7]. Economic Forecasts - The report provides GDP growth forecasts for various regions, with the US projected at 1.0% for 2025 and 1.1% for 2026, while the Euro Area is also expected to grow at 1.0% in 2025 [8]. - Inflation rates are forecasted to be 3.0% for the US in 2025 and 2.5% in 2026, while the Euro Area is expected to see inflation rates of 2.1% and 1.8% respectively [8]. Equity Market Outlook - The report suggests a preference for quality cyclical stocks and large-cap defensives with lower leverage and cheaper valuations in the US market [5]. - In Europe, it recommends focusing on resilient sectors such as defense, banks, software, telecoms, and diversified financials [5]. - Emerging markets are favored towards financials and profitability leaders, with a preference for domestic-focused businesses over exporters [5]. Fixed Income and Currency Strategy - The report indicates an overweight position in core fixed income and a cautious stance on other fixed income assets, anticipating Treasury yields to remain range-bound until late 2025 [3][13]. - The US dollar is expected to face pressure, with the DXY projected to fall 9% to 91 by mid-2026 due to rising policy uncertainty and increased FX-hedging ratios [13]. Commodity Insights - The report notes that oil prices are expected to face downside risks due to a projected surplus, with Brent prices likely not falling below $60 per barrel [15]. - European gas and global LNG prices are anticipated to remain range-bound, although there may be marginal upside due to rising competition for available LNG [16]. - The report favors gold and silver amidst further USD weakness and rising inflation [17].

Investment Rating - The report maintains a positive outlook on the cloud services industry, particularly for AWS, with projected growth rates of 18%-20% in the coming years [1][4]. Core Insights - AWS shows strong order backlog and demand in both AI and non-AI sectors, similar to competitors Azure and GCP [1][3]. - NVIDIA's Blackwell chip procurement by the top four cloud providers is expected to reach $65-70 billion in 2025, with AWS capturing a smaller share compared to Microsoft and Google due to its in-house chip strategy [1][5]. - AWS's profit margin has decreased by 600 basis points due to stock incentive adjustments, but revenue growth is expected to rebound to around 30% in the upcoming quarters [8]. Summary by Sections AWS Growth and Performance - AWS is projected to achieve growth rates of 18%-19% in the second half of 2025 and 20% in the first half of 2026, with AI companies contributing significantly to revenue growth [1][4]. - Annual recurring revenue from AI companies is expected to increase from $1 billion to $4-5 billion, contributing approximately 2% to overall growth [4]. Capital Expenditure and Strategy - Capital expenditures are primarily directed towards AWS for power and data center construction, with an annualized increase of approximately $30 billion [2][9]. - There are indications that AWS may introduce AMD instance services, which could diversify its offerings but still rely heavily on NVIDIA's dominance in the cloud market [7]. Competitive Landscape - Meta's advancements in GPU machine learning are expected to enhance user engagement and profitability, with EPS projections for 2026 reaching $33, potentially rising to $35 with strong performance [12]. - Google's cloud business is performing well, with partnerships with AI-native companies and advancements in technologies like Gemini, positioning it for significant growth in 2026 [14][15].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies involved in stablecoin development in Hong Kong. Core Insights - Hong Kong is positioned as a strategic testing ground for stablecoin development, with the upcoming Stablecoin Regulation set to enhance reliability and transparency, facilitating the issuance of offshore RMB stablecoins [1][11][19] - The initial development of offshore RMB stablecoins is expected to be slower compared to USD and HKD stablecoins due to capital controls and limited offshore RMB liquidity [2][25] - Key beneficiaries of the stablecoin ecosystem include issuers, brokers, and fintech companies with mature blockchain technology, while traditional banks and e-commerce platforms will undergo a gradual transformation [2][11][32] Summary by Sections Regulatory Framework - The Hong Kong Stablecoin Regulation will take effect on August 1, 2025, marking Hong Kong at the forefront of global stablecoin legislation [11][19] - The regulation requires stablecoin issuers to maintain a minimum paid-up capital of HKD 25 million or 1% of the total outstanding stablecoins, and mandates the storage of reserve assets in independent accounts [19][20] Market Opportunities - The report highlights that the current market opportunities are primarily focused on USD and HKD stablecoins, which are utilized in cryptocurrency trading and cross-border settlements [11][25] - Companies like Futu Holdings, ZhongAn Online, and Hong Kong Exchanges and Clearing are expected to stand out as they leverage their existing platforms and capabilities in the stablecoin space [2][35][36] Challenges and Limitations - The development of offshore RMB stablecoins faces challenges such as market liquidity issues, weak network effects, and existing cross-border settlement tools [2][25] - The report emphasizes that the widespread adoption of stablecoins in cross-border e-commerce will take time due to the established payment systems in developed markets and regulatory uncertainties [33][34] Future Outlook - The report anticipates that the rise of stablecoins will enhance Hong Kong's capital market infrastructure, potentially leading to increased financial market investments globally [28][29] - The integration of stablecoins into existing financial systems will depend on regulatory clarity and the willingness of market participants to adopt these new payment methods [30][32]

Investment Rating - The report maintains an equal weight in equities, overweight in core fixed income, and underweight in other fixed income [4][6]. Core Insights - The US labor market is gradually cooling, with expectations of a decline in real GDP growth from 2.5% in 2024 to 0.8% in 2025 [2][8]. - Global growth is projected to decrease from 3.5% in 2024 to 2.5% in 2025, influenced by tariff shocks and immigration restrictions [2][8]. - The report highlights a preference for quality cyclical stocks and investment-grade credit over high-yield credit amid growth and tariff risks [4][6]. Economic Outlook - The US GDP growth forecast for 2025 is revised down to 0.8%, with inflation expected to peak at 3.0% [9]. - The Euro Area and Japan are also projected to experience slow growth, with GDP growth of 0.8% and 0.4% respectively in 2025 [9]. - The report anticipates a significant drop in global demand due to tariffs, impacting supply chains and investment [8]. Sector Recommendations - In the US, the focus is on quality cyclicals, large caps, and defensives with lower leverage [6]. - Key sectors in Europe include defense, banks, software, telecoms, and diversified financials, with a recommendation to reposition into resilient market pockets [6]. - Emerging markets are favored towards financials and domestic-focused businesses over exporters [6]. Market Valuations - The S&P 500 is projected to reach a price target of 6,500 with a P/E ratio of 22.5x for 2025 [7]. - The MSCI Europe index is expected to see a slight decline in earnings, with a target of 2,250 [7]. - Emerging markets are forecasted to have a P/E ratio of 13.1x, with a target of 1,200 [7].