Investment Rating - The report maintains a cautious outlook on the industry, with GDP growth tracking below 4.5% year-on-year for 2Q 2025, down from 5.4% in 1Q 2025, primarily due to escalating tariffs impacting trade with the US [1][10]. Core Insights - The report highlights significant trade impacts from the 125% reciprocal US tariffs on China, leading to a sharp decline in shipments to the US and a notable drop in China's container throughput and freight shipping prices [2][10]. - Consumer sentiment is weakening, with rising household concerns over jobs and salaries, resulting in reduced consumption appetite and a cooling property market [3][10]. - The report suggests that while tariff de-escalation may occur in the next 1-2 months, achieving a durable resolution remains challenging due to the complexity of bilateral issues [5][8]. Summary by Sections Economic Impact - 2Q GDP growth is projected to slow significantly, with a forecast below 4.5% year-on-year, attributed to the adverse effects of US tariffs [1][10]. - The logistics data indicates a 64% week-on-week decline in ocean container bookings from China to the US in early April 2025 [2]. Consumer Sentiment - The AlphaWise Consumer Pulse Survey indicates initial signs of a secondary hit from US tariffs, with increased household concerns over job security and reduced consumption [3][19]. - Year-on-year sales of online home appliances and passenger cars have softened, and secondary housing sales have moderated more than seasonal trends would suggest [3][27]. Tariff Analysis - The report identifies low tariff elasticity for 30-40% of China's export products to the US, particularly in consumer electronics, which constitute 22% of China's exports to the US [4][21]. - The expectation is that US tariffs on China could be reduced to 60% by the end of June 2025, contingent on successful trade negotiations [5][8]. Policy Response - The report anticipates that Beijing will implement a front-loaded Rmb2 trillion stimulus package in 2Q 2025, with an additional Rmb1-1.5 trillion supplementary fiscal package expected in the second half of the year [10][32]. - As of April 2025, 36% of this year's government bond quota has been utilized, compared to an average of 20% in the past five years, indicating a proactive policy approach [10][29].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Viewpoints - Shifting business operations away from China is nearly impossible for other Asian economies due to China's central role as a market, supplier, and source of foreign direct investment [1][6][12] - Any trade restrictions imposed on China by other Asian economies would likely lead to retaliatory measures from China, severely impacting trade, capital flows, and growth prospects in the region [6][12][13] Summary by Sections Trade Restrictions and Challenges - The report analyzes which economies might be pressured to impose trade restrictions on China and concludes that most Asian economies outside of China would find it very difficult to implement such measures [3][6] - Economies like Vietnam, Thailand, and India, which have significant trade surpluses with the US and deficits with China, would struggle to impose tariffs on China due to their reliance on Chinese inputs [8][12] Economic Dependencies - China is a crucial source of final demand, inputs, and equipment for many Asian economies, particularly ASEAN countries, making it challenging for these economies to decouple from China [12][34] - Approximately 17% of exports from Asia (excluding China and Hong Kong) go to the US, while 16.6% go to China, highlighting the significant trade relationships within the region [12][26] Investment Flows - China accounts for 7.9% of foreign direct investment inflows into Asia (excluding China), with ASEAN economies being particularly reliant on Chinese investment [12][34] - The share of ASEAN in China's outward foreign direct investment has increased from 15% in 2018 to 20% in 2023, indicating growing economic ties [34][38] Supply Chain Implications - The report emphasizes that imposing tariffs on Chinese goods would disrupt the cross-border production networks in Asia, leading to inflation in consumer goods prices [12][30] - China holds a significant share in global exports of key products, such as mobile phones (37%) and computers (37%), meaning tariffs would likely lead to increased prices for these goods in other Asian economies [30][31] Conclusion - The report concludes that Asian economies are unlikely to impose trade and investment barriers against China, as it would severely disrupt their existing business models and economic growth [13][34]

Investment Rating - The report advises a balanced portfolio approach, recommending high-quality, large-cap internet names in offshore markets and blue-chip consumer names in the A-share market [1][4]. Core Insights - A-share sentiment has decreased, with the weighted Morgan Stanley A-share Sentiment Indicator (MSASI) dropping 13 percentage points to 70% and the simple MSASI falling 15 percentage points to 61% compared to the previous cutoff date [2][6]. - Average daily turnover (ADT) for ChiNext, A-shares, and Equity Futures has decreased by 18%, 17%, and 40% respectively, while ADT for northbound trading increased by 27% [2]. - Southbound net inflows have continued for 56 consecutive weeks, with net inflows of US$0.7 billion over April 17-23, bringing year-to-date and month-to-date net inflows to US$77.5 billion and US$21.8 billion respectively [3]. - Potential tariff de-escalation could benefit large-cap internet/tech, consumer, and healthcare sectors, with expectations that offshore markets may outperform onshore markets if such de-escalation occurs [4][13]. Summary by Sections A-Share Market Sentiment - The MSASI indicates a current sentiment of 70% (weighted) and 61% (simple), reflecting a notable decline in investor sentiment [6][8]. - The report highlights a slowdown in the downward momentum of consensus earnings estimate revisions since late November 2024 [2]. Trading Volume and Inflows - The report notes a significant drop in trading volumes across various segments, with ChiNext experiencing an 18% decline in ADT [2]. - Southbound trading has shown resilience with consistent net inflows, indicating ongoing interest in A-shares from international investors [3]. Tariff and Economic Outlook - The report discusses the implications of potential tariff reductions, suggesting that if realized, they could lead to improved performance in specific sectors [4][14]. - The analysts emphasize the importance of monitoring bilateral negotiations and government responses to evolving trade narratives [14].

Investment Rating - The report assigns an "In-Line" investment rating for the biopharma industry in North America [7] Core Insights - The latest weekly Total Prescription (TRx) year-over-year (YoY) growth for the week ending April 11, 2025, was +2.7%, a decrease from +3.5% the previous week, but consistent with the +2.7% growth over the past 12 weeks [1][2] - The report highlights the launch performance of new drugs, including BMY's Cobenfy for schizophrenia and VRTX's Journavx for acute pain, with specific TRx targets needed to meet consensus sales estimates [3][4] Summary by Sections Market Overview - The US total market weekly TRx YoY change was +2.7% compared to +2.3% a year ago, with a rolling 4-week TRx YoY also at +2.7% [2] - Extended unit (EUTRx) weekly YoY growth was +1.4%, indicating a slower growth rate compared to TRx YoY [2] Drug Launch Analysis - BMY's Cobenfy, approved for schizophrenia, recorded approximately 1,660 scripts for the week, up from 1,580 the previous week, with a target of 105K TRx needed to meet 2025 consensus estimates [3] - VRTX's Journavx, approved for acute pain, had around 2,950 scripts for the week, with an estimated average script size of 35-37 pills, indicating a need for approximately 229K scripts for a 14-day duration to achieve $87 million in sales [4] Prescription Trends - The report includes a detailed analysis of prescription trends for major pharmaceuticals, highlighting significant YoY changes for key products such as Humira, Rinvoq, and Skyrizi [19][21] - The GLP-1 franchise, particularly Mounjaro and Zepbound, showed notable growth, with Mounjaro experiencing a 69% YoY increase [21] Seasonal Vaccine Tracking - The report tracks seasonal respiratory vaccines, noting that RSV vaccine volumes are approximately 65% below last year's levels, while COVID vaccine volumes are also down year-over-year [10]

Investment Rating - The industry view for China's financial sector is rated as Attractive [4] Core Insights - China's banks have sufficient capacity to absorb potential risks from increased US tariffs, with stable earnings and dividends expected to support share performance [1][12] - The potential industrial non-performing loan (NPL) ratio is forecasted to rise to 10-11% from 8.4% at the end of 2024 due to tariff impacts [15][20] - The analysis indicates that approximately 4% of total loans, primarily export-related credits, are exposed to tariff risks, with electronics and electrical equipment being the most affected sectors [10][12] Summary by Sections Financial Stability - Major Chinese banks are expected to maintain stable earnings and dividends despite potential delays in net interest margin (NIM) and fee income recovery [1][58] - The banking sector has been digesting over RMB 3 trillion of total NPLs annually, with a consistent provision charge of around RMB 1.3 trillion [18][19] Risk Assessment - The incremental NPL from higher tariffs could be 2-3% for industrial loans, translating to an increase of 40-60 basis points in total loans [7][12] - The forecast suggests that if tariffs affect one-third of export-oriented manufacturing credits, the cumulative industrial NPL ratio could reach 15-16% [20][22] Sector-Specific Insights - The electronics sector accounts for 22% of exports to the US, while apparel and furniture have higher revenue exposure, indicating varying levels of risk across sectors [10][11] - Continued capital expenditure rationalization in the industrial sector is expected to ease some risks associated with industrial loans [33][37] Market Dynamics - The ongoing tariff dynamics are anticipated to create uncertainties in the A-share market, affecting both fundamentals and investor sentiment [58] - A shift in preference back to defensive banks from insurance is noted, reflecting market volatility and the need for stable earnings [56][58]

Investment Rating - The industry view is rated as Attractive, with specific companies like ALLE, LII, MMM, and WSO being analyzed for their performance and outlook [6]. Core Insights - The report anticipates modest Q1 earnings beats, but emphasizes that outlooks will significantly influence equities, particularly focusing on April demand commentary and price/cost dynamics for the rest of the year [2]. - There is a strong emphasis on pricing power as a key factor for companies to navigate through tariff uncertainties, with a belief that those able to push prices will fare better in terms of near-term revisions [13][19]. - The report highlights a shift in activity towards US Industrials due to reshoring trends, suggesting that US companies are well-positioned to capture a larger share of global capital expenditure [68]. Summary by Sections Company-Specific Analysis - **ALLE**: The consensus modeling is viewed as conservative for Q1 but aggressive for the rest of the year, with expectations of a modest Q1 EPS beat driven by residential construction dynamics [78][79]. - **LII**: Expected to see a strong beat in Q1, but with a fade in performance anticipated due to difficult comparisons in the second half of the year [6]. - **MMM**: Identified as a top risk due to tariff pre-buy concerns, with a projected Q2 growth of 5% quarter-over-quarter, which is considered aggressive [6]. - **WSO**: Positioned well to achieve pricing power and potentially positive revisions if it can maintain high gross margins amidst tariff inflation [6]. Macro Environment and Trends - The report discusses the impact of tariffs on production and project activity, noting a slowdown in project activity due to uncertainty, while production is expected to continue [9][31]. - It highlights that the US accounts for approximately 30% of global consumption, which provides a competitive advantage for US manufacturers in the face of international competition [9]. - The report indicates that the preference for industrial over consumer exposure is driven by a more capital-intensive world, suggesting a positive outlook for industrial sectors amidst rising inflation [10][20]. Pricing Power and Market Dynamics - The report emphasizes that companies with strong pricing power are likely to perform better in the current macroeconomic environment, where uncertainty is prevalent [13][16]. - It notes that pre-buys are generally negative indicators, as they signal a potential decline in future demand, particularly for companies heavily reliant on international sales [41][45]. - The analysis suggests that the ability to maintain price/cost neutrality will be crucial for companies as they navigate through tariff implementations [13][41].

Investment Rating - The industry view for Greater China Materials is rated as Attractive [6] Core Insights - Lithium demand may be pressured by trade tensions, with a market surplus expected to increase to approximately 10,000 tons of lithium carbonate equivalent (LCE) in April, leading to downward pressure on prices [2][3] - Uranium fundamentals remain solid despite a spot price correction, with term pricing stable at around US$80 per pound, indicating a constructive medium-to-long-term supply-demand outlook [3] - Solar glass prices are likely to stabilize due to supply responses, although pressures are expected to persist in the second half of 2025 as demand decreases [4][10] Summary by Sections Lithium - Demand in 1Q25 was stronger than expected due to EV trade-in programs and energy storage system (ESS) demand, but the peak season in 2Q25 is anticipated to be muted due to earlier demand pull-forward [2] - Tariff uncertainties have caused large EV makers to pause April order books, leading to a potential price bottom for lithium carbonate at approximately Rmb65,000 per ton [2] Uranium - The spot price has declined to around US$60 per pound, influenced by uncertainties regarding Russian enriched uranium and US tariffs, but the gap between spot and term prices has widened, limiting further downside [3] - Supply imbalances are expected to gradually reflect in the market, potentially pushing uranium prices higher and benefiting companies like CGN Mining [3] Solar Glass - A reasonable recovery was noted in 1Q25, with prices rebounding due to increased demand from module producers, but a decrease in demand is expected in June as rush installations conclude [4][10] - The near-term supply and demand for solar glass could remain solid, supporting earnings recovery for producers, but increased industry supply may pressure prices again in 2H25 [10] Rare Earth Magnets - An upward trend in rare earth prices is anticipated due to new smelting regulations and tariffs, which could tighten supply from imports, benefiting producers [11] Stock Ratings - Overweight-rated stocks include Xinyi Solar, CGN Mining, and various rare earth magnet producers, with significant upside potential noted for several companies [12][13]

Investment Rating - Industry View for China Materials is rated as Attractive [6] - Industry View for China Cement is rated as In-Line [6] - Industry View for China Coal is rated as Cautious [9] Core Insights - The Trump administration has initiated a tariff probe on all US critical mineral imports, which may impact supply chains and pricing in the sector [6][20] - Baosteel is continuing its industry consolidation efforts, investing Rmb9 billion to acquire a 49% stake in Magang Limited [3][6] - Base metals have shown price increases, with Shanghai copper prices up 2.5% week-over-week (WoW) and aluminum prices up 1.3% WoW, while inventories for both metals have decreased [6][10] - Battery metals are under pressure, with prices for lithium hydroxide and lithium carbonate declining slightly, and stockpiling expected to continue [2][20] - Gold prices have increased by 2.8% WoW, attributed to Zijin Mining's acquisition of the Akyem Gold Project in Ghana, which has significant production potential [3][34] Summary by Sections Base Metals - Shanghai copper prices increased by 2.5% WoW to Rmb76,380/t, with inventories down 6.2% [10] - Shanghai aluminum prices rose by 1.3% WoW to Rmb19,830/t, with inventories down 7.4% [10] Battery Metals - Domestic industrial-grade lithium hydroxide prices decreased by 0.3% WoW to Rmb62,750/t, while battery-grade prices also fell by 0.3% to Rmb68,830/t [2][10] - Industrial-grade lithium carbonate prices dropped by 0.2% WoW to Rmb69,650/t, and battery-grade prices fell by 0.4% to Rmb71,450/t [2][10] - Mysteel anticipates continued stockpiling of lithium carbonate in April, with prices under pressure due to flat demand [20] Gold - Gold prices rose by 2.8% WoW to US$3,327/oz, following Zijin Mining's acquisition of the Akyem Gold Project [3][34] Steel - Shanghai HRC prices decreased by 1.8% WoW to Rmb3,220/t, while CRC prices fell by 1.3% to Rmb3,961/t [10] - Long steel inventories decreased by 6.4% WoW, while flat steel inventories fell by 2.0% WoW [10] Cement - Cement prices decreased by 0.7% WoW to Rmb389/t [4][10] Coal - Coal prices remained flat WoW at Rmb678/t, with Qinhuangdao inventory increasing by 11.2% to 6.85 million tons [4][10] - The NDRC has issued a plan to upgrade coal-fired power plants from 2025 to 2027 [28][29]

Investment Rating - The report provides a short-term investment focus on specific companies across various sectors, highlighting preferred and risk names based on tariff impacts [7][30]. Core Insights - The report analyzes the implications of the Trump administration's tariffs on nine major sectors, emphasizing the direct and indirect impacts on individual companies and their stock performance [6][30]. - The automotive sector is expected to face significant price increases due to tariffs, with an estimated 11.5% rise in US auto prices, translating to approximately $5,100 per vehicle [9][17]. - The report identifies key companies within each sector that are likely to be affected by tariffs, providing a detailed analysis of their potential performance [4][30]. Sector Summaries Autos and Auto Parts - Tariffs on automobiles could lead to a gross impact on operating profit ranging from 30% to over 100% for various automakers, with Toyota and Honda facing a manageable impact while Nissan and Mazda are at higher risk [4][9]. - Focus is placed on Toyota Motor for its resilience and ability to raise prices, while Bridgestone is noted for its high local production ratio [30][31]. Banks - The impact of tariffs on banks remains uncertain, but concerns over worst-case scenarios have eased, with a potential downside risk of slightly over 10% to sector earnings forecasts in a bearish scenario [4][33]. - Japan Post Bank is highlighted as a relatively stable option amidst tariff uncertainties [4][33]. Pharmaceuticals and Medical Devices - Major pharmaceutical companies like Takeda and Astellas are expected to be heavily impacted by tariffs, while companies with lower US sales ratios may benefit from tariff avoidance [4][30]. - The report emphasizes the potential for increased costs of goods sold (CoGS) affecting operating profits for medical device companies [4]. Technology - The technology sector's tariff impact is complex, with companies like NEC and Fujitsu expected to perform well due to limited exposure to tariffs [5][30]. - Sony Group is under close observation for potential price hikes on its products, particularly the PlayStation 5 [5][30]. Chemicals and Steel - In the chemicals sector, companies like Nippon Paint are expected to benefit from lower raw material prices, while the steel sector is anticipated to experience limited direct tariff impacts [5][30]. - Kobe Steel is noted for its resilience due to a significant earnings contribution from its machinery business [5][30]. Retail - The retail sector is advised to focus on drugstores and discount retailers, with companies like Asics and Fast Retailing facing risks from declining sales due to high tariff exposure [5][30]. - Seven & i Holdings is highlighted as particularly vulnerable due to its significant exposure to the US market [5][30].

Investment Rating - The report maintains an Equal Weight (EW) stance on China, while preferring Japan, India, Singapore, and UAE, and underweight (UW) on Taiwan and South Korea [1][2]. Core Insights - The report highlights that multipolar world trends are gaining traction, with deal-making potential tempered by uncertainty in trade and earnings outlook [1]. - Financials are preferred over Semiconductors and Tech Hardware, with a focus on defensive sectors such as Gold, Aerospace & Defence, and Supply Chain Diversification Beneficiaries [2]. - AI is expected to play a central role in 2025, with a preference for Adoption Leaders over Semiconductors [2]. Summary by Sections Trough Indicators - The report outlines 12 signposts for identifying a trough in Emerging Market (EM) equities, scoring from 1 (no sign of trough) to 5 (compelling trough indicator), with a total score of 37 out of 60 [10]. - Key indicators include expectations for US Federal Reserve monetary policy (score 3), the US dollar peaking (score 4), and technical indicators moving into oversold territory (score 4) [10]. Market Performance - Historical data shows that corrections have been relatively modest compared to historical bear markets, with an average fall of 38.5% from peak to trough from 1997 to 2022 [11]. - Current valuations for Emerging Markets (EM) are approximately 23% below prior recession average trough levels, indicating potential investment opportunities [12]. Trade Dynamics - The report discusses the trade balances of developed markets and emerging markets, highlighting the significant trade surplus of China and the trade deficits of several developed nations [33][35]. - It emphasizes that the US remains dependent on China for many imports, which could impact future trade negotiations and economic policies [44][46]. Economic Outlook - The US macro outlook presents various scenarios ranging from optimistic to adverse, with GDP growth projections indicating potential declines due to trade shocks and fiscal policies [49]. - The report suggests that immigration policies and tariff rates will significantly influence economic growth and consumer spending in the coming years [49].