Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Investors should prepare for continued market volatility and hold their convictions loosely while maintaining tight stop-losses [1] - The narrative around the global outlook has shifted, with expectations for the EUR to strengthen against the USD, targeting 1.20 [4][61] - Tariffs are raising prices and harming consumer confidence, which may lead to adverse economic impacts before any easing from the Federal Reserve takes effect [10][62] - The supply of global fixed income safe havens is at multi-decade lows, while demand for them is at local highs [10][32] - A gradual reduction in foreign investor exposure to US equities is observed, while fixed income exposure remains stable [46][71] Summary by Sections Global Macro Strategy - The US administration's trade policy is causing uncertainty, and the perceived 'master plan' may not effectively mitigate economic pain from tariffs [11][12] - Consumer and CEO confidence have declined, indicating potential economic slowdown [13][22] US Rates Strategy - Concerns about liquidity in funding markets are rising, with pressures expected to persist due to tax collections [6][62] - The report suggests staying short on certain securities as market conditions remain fragile [59] Euro Area Rates Strategy - A shift to a received 5y5y real yield position is recommended, as Europe is viewed as a safer haven asset [5][60] G10 FX Strategy - A new tracker for US outflows from foreign investors has been introduced, indicating a trend of reduced exposure to US equities [7][44] - The DXY is expected to decline as foreign investors continue to reduce their US asset exposure, particularly benefiting the EUR [44][71] Safe Haven Analysis - The report highlights a significant drop in AAA/Aaa rated bonds globally, exacerbated by the recent downgrade of US long-term debt [32][33] - Investors have fewer safe-haven options outside US Treasuries, which may become more pronounced if the macro environment deteriorates [38][39]

April 14, 2025 08:00 PM GMT Greater China Semiconductors | Asia Pacific M Idea Cloud semis: 2018 vs. 2025 – déjà vu? We maintain our conservative view on cloud semis entering the second quarter of cloud capex deceleration. That said, we provide five signposts on when to turn positive. Key Takeaways 2025 vs. 2018 downturn… very high similarity: US cloud capex Y/Y peaked in 4Q24 – see Cloud Semis: Time to Take Some Profits (September 15, 2024). We find the narrative and share price performance in the 2025 dow ...

Investment Rating - The report does not explicitly provide an investment rating for the industry but indicates a cautious outlook due to abnormal market conditions and economic forecasts [2][10][16]. Core Insights - The report discusses a "pause" in tariff increases, which has led to significant market movements, but overall tariffs remain historically high, impacting growth forecasts for the US and euro area [3][13][14]. - Economic growth forecasts for the US and euro area are projected at 0.6% for 2025, which is considered low and may lead to above-average risk premiums for investors [3][14]. - The Federal Reserve is not expected to cut rates in 2025, contrary to market expectations, while the European Central Bank and Bank of England are anticipated to implement rate cuts [4][19][21]. Summary by Sections Global Credit Overview - Recent market movements are characterized as abnormal and more typical of bear markets, indicating a wider range of potential outcomes [9][10]. - Heavy outflows from credit markets have been noted, with significant amounts withdrawn from investment-grade (IG) and high-yield (HY) funds [33]. Economic Forecasts - The report highlights that tariffs are expected to contribute to core PCE inflation exceeding 3.5% in the second half of 2025, complicating the Fed's ability to cut rates [4][21]. - The report emphasizes that the market may be overly optimistic regarding the timing of Fed rate cuts, with expectations of approximately 75 basis points of cuts in 2025 not aligning with the economists' views [17][18]. Sector-Specific Insights - In the retail sector, companies are being sensitized to the impact of tariffs, with potential EBITDA reductions and increased leverage expected due to the cumulative tariff rate reaching 104% [45][46][47]. - The Asia credit strategy suggests that credit spreads in the region should widen due to concerns over tariffs and valuations, advising investors to focus on defensive trades [39][41]. Tactical Considerations - Key sentiment indicators remain in a state of fear, which may provide a buffer against further market declines [22][24]. - Upcoming data releases, including retail sales and ECB rate decisions, are expected to influence market dynamics significantly [23].

Investment Rating - The report indicates a downward revision of the FY2025 GDP growth forecast to 4.2% from previous estimates, reflecting a cautious outlook on the Chinese economy [4][9]. Core Insights - The key drivers for the strong 1Q growth of 5.4%Y were attributed to front-loaded government bond issuance for infrastructure and robust consumer goods sales [2][5]. - Real GDP growth is expected to slow significantly to below 4.5%Y in 2Q and below 4%Y from 3Q due to elevated US tariffs and their impact on domestic demand [3][9]. - The Chinese government is likely to accelerate the front-loading of a Rmb2 trillion NPC stimulus in 2Q, with potential supplementary fiscal packages in 2H25 [4][9]. Summary by Sections Economic Performance - 1Q GDP growth was reported at 5.4%Y, surpassing the consensus of 5.2%, driven by strong infrastructure and consumption policies [5][9]. - Industrial production showed a YoY increase of 7.7% in March, with manufacturing rising by 7.9% [6]. Export and Tariff Impact - Exports to the US are projected to decline by 50-70% in 2Q and 3Q due to ongoing tariff pressures, exacerbating domestic excess capacity and deflation [3][4]. - The GDP deflator decreased by 10bps to -0.8%Y, indicating deflationary pressures in the economy [2]. Policy Response - The Chinese government is expected to implement measures to boost consumption and address housing inventory issues, although these may only partially mitigate the effects of tariff shocks [4][9]. - A supplementary fiscal package of Rmb1-1.5 trillion is anticipated in the second half of 2025 [4][9].

April 16, 2025 01:57 PM GMT China Consumer Pulse | Asia Pacific AlphaWise Consumer Pulse Survey Apr-25 Our survey, conducted April 8-11, shows initial signs of secondary hit from US tariffs. Household concerns over job and salaries rose with slumping consumption appetite and cooling property market sentiment. These point to the need for more policy stimulus to mitigate tariff shocks. M Higher US tariffs have increased household concerns about jobs, income growth and investment loss: Our latest AlphaWise con ...

M Foundation April 16, 2025 01:01 PM GMT Investor Presentation | Asia Pacific Reflation, Tariffs and Tech Morgan Stanley Asia Limited+ Robin Xing Chief China Economist Robin.Xing@morganstanley.com +852 2848-6511 For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. Foundation M Growth to Reach 4.2% in 2025 amid Tariff Shocks Growth to soften meaningfully in Q2-Q3 Persistent deflation pressure 3.5 4.0 4.5 5.0 5.5 6.0 6.5 1Q23 2Q23 3Q23 ...

April 16, 2025 04:01 AM GMT Software | North America Takeaways from our Silicon Valley Bus Tour On our SV Bus tour, the vast majority of companies spoke to seeing no impact from the uncertain macro yet. Key themes included the growing use of AI internally to boost efficiency, while customer facing AI solutions show promising traction, but are still in the early stages of monetization. Still Waiting... Morgan Stanley Team Software spent two days this week meeting with executives from public and private softw ...

Investment Rating - The report maintains an "Overweight" (OW) rating on Fuyao Glass and Minth, while downgrading Nexteer to "Neutral" due to its high exposure to the North American market [2][6]. Core Insights - The earnings estimates for the China auto parts industry have been revised down by 10-30% for 2025, reflecting the impact of increased tariffs and potential declines in North American auto production [2][5]. - The total tariff on auto parts imported from China to the US is projected to reach 73.4% effective May 3, 2025, which will significantly affect the cost structure for suppliers [5][14]. - The report anticipates a 6% increase in auto selling prices and a 6% decline in unit volume in North America over the next 12 months due to the tariff imposition [5][23]. Summary by Sections Earnings Revisions - Fuyao Glass's 2025E revenue is cut by 1% and earnings by 8% due to reduced VAT tax rebates and increased tariffs [27][28]. - Nexteer's earnings for 2025/26 are reduced by 30-33% due to a slowdown in North American sales [30]. - Minth's earnings are cut by 12% for 2025/26, reflecting the impact of the North American market slowdown and tariff hikes [31]. - Ningbo Tuopu's earnings are reduced by 11%/10% for 2025/26, factoring in lower revenue assumptions and margin reductions [32]. - Ningbo Joyson's earnings are cut by 28%/29% for 2025/26 due to lower revenue assumptions and margin reductions [34]. Revenue Exposure - Nexteer has 28% of its sales in China and 72% overseas, with over 50% of its sales coming from North America [20]. - Fuyao Glass has 55% of its sales in China and 45% overseas, with a significant portion of its exports affected by the new tariffs [20]. - Tuopu has 71% of its sales in China, with limited exposure to North America due to its recent production start in Mexico [20]. Valuation Comparisons - Fuyao Glass's price target is lowered from Rmb70 to Rmb65 based on revised earnings [36]. - Nexteer's price target is reduced from HK$8.0 to HK$4.5, reflecting a downgrade to Neutral [36]. - Minth's price target is lowered from HK$30 to HK$25 based on revised earnings [36].

M Global Insight June 6, 2024 02:18 PM GMT Global Technology Advanced Packaging – Thriving On AI Complexity An upgrade supercycle is coming to advanced packaging, fuelled by AI's insatiable demand for computing power, memory, and even new chip architectures. We think the market underestimates both the pace of innovation and the implications for growth. We see outsized winners in Japan, Korea, and the EU. Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a res ...

Investment Rating - The industry investment rating is cautious [3][25]. Core Insights - The US government has implemented new licensing requirements for H20 product shipments to China, impacting NVIDIA with potential charges of up to US$5.5 billion in the April quarter [1]. - The US semiconductor team has revised down NVIDIA's datacenter revenue by approximately US$5.9 billion for the April to October quarter, indicating a 2% downside on HBM Total Addressable Market (TAM) estimates [1]. - Each H20 product utilizes 96GB HBM3 at an average selling price (ASP) of US$1.4/Gb, leading to an estimated revenue impact of around US$490 million on HBM suppliers in the upcoming quarters [1]. Summary by Relevant Sections Industry Overview - The report highlights the cautious outlook for the South Korean technology sector, particularly in memory products due to regulatory changes affecting supply chains [3][25]. Company Ratings - The report includes various company ratings within the South Korean technology sector, with notable mentions such as: - Samsung Electronics rated as Overweight [53] - SK hynix rated as Equal-weight [53] - LG Display rated as Underweight [53]