Investment Rating - The report has an Overweight (OW) recommendation on Tencent bonds maturing in 2029, 2030, 2031, 2038, 2041, 2049, 2050, 2051, 2060, and 2061, and a Marketweight (MW) recommendation on bonds maturing in 2026 and 2028 [4][15]. Core Insights - Tencent's revenue grew by 13% year-over-year (YoY) to RMB180.0 billion in 1Q25, driven by strong performance in online advertising (+20% YoY) and value-added services (+17% YoY) [1][7]. - The company's adjusted EBITDA increased by 18% YoY to RMB81.6 billion, with an adjusted EBITDA margin of 45.3%, reflecting a 1.9 percentage point (ppt) improvement YoY [1][7]. - Tencent's net debt position was small at RMB34.5 billion, with total equity increasing by 7% to RMB1,122.9 billion [2][7]. - The gross leverage ratio slightly increased to 1.3x, while the debt-to-capitalization ratio rose to 25.6% [2][7]. - The report highlights Tencent's favorable position in the gaming industry and the stable regulatory environment as key factors for its growth [4][15]. Financial Summary - In 1Q25, Tencent's gross profit grew by 20% YoY to RMB100.5 billion, with a gross margin improvement of 3.2 ppt YoY to 55.8% [1][7]. - The company's cash and short-term investments amounted to RMB351.3 billion, covering its short-term debt 6.6 times [2][7]. - Year-to-date, TENCNT bonds have tightened by an average of 1 basis point in z-spread, outperforming BABA bonds by 8 basis points [3][7].

Investment Rating - The report indicates a neutral investment sentiment with the BofA Bull & Bear Indicator at 3.6, down from 3.9, suggesting a cautious approach to market conditions [10][56][58]. Core Insights - The report highlights significant outflows from gold and US equities, with $1.5 billion outflow from gold and $8.9 billion outflow from US equities, while Japan and Europe equities saw inflows of $4.4 billion and $3.4 billion respectively [20][34]. - The report notes a substantial decline in oil prices, down 56% since the Russia/Ukraine conflict in 2022, which is interpreted as a signal of potential recession or geopolitical peace [5][13]. - The report emphasizes a strong capital expenditure in technology, tracking at $320 billion for 2025, which may alleviate recession concerns despite soft macroeconomic data [4][5]. Summary by Sections Market Performance - Year-to-date performance shows gold at +22.0%, government bonds at +6.6%, investment-grade bonds at +4.9%, high-yield bonds at +2.9%, cash at +1.4%, while stocks are at -0.3% and commodities at -5.3% [2]. Economic Indicators - The 2-year Treasury yield has decreased by 70 basis points since the inauguration, and oil prices have dropped by 20% [4]. - The consensus for US GDP growth in 2026 has been revised down to 1.5% from 2% [5]. Fund Flows - Recent fund flows indicate $8.3 billion inflow to stocks, $3.7 billion to bonds, and $2.3 billion to crypto, while there were significant outflows from gold and US equities [14][20]. - BofA private clients have shifted towards "deflationary defensives" such as utilities and high-dividend ETFs, indicating a strategic pivot in investment preferences [16][40]. Sector Analysis - Inflows were noted in the materials sector ($1.4 billion) and technology sector ($0.8 billion), while outflows were observed in energy, consumer, healthcare, financials, and real estate sectors [36].

Investment Rating - The report indicates a bearish outlook on US equities, with a short position on the S&P 500, NASDAQ-100, and Russell 2000, reflecting a trend signal of -58% for the S&P 500 [24][25]. Core Insights - Trend followers are currently short on US equities despite recent gains in major indices, indicating a negative price trend [1]. - The report highlights a stretched short position in Aluminum, which may lead to price impacts if futures rise [2]. - In the FX market, trend followers are expected to sell USD against CAD and MXN, while potentially increasing long positions in Canadian and Korean bonds [3]. Summary by Sections Systematic Flows Monitor - Trend followers are long on Gold and short on Oil, with a general decline in gross leverage noted among trend followers [1]. - US equity shorts are expected to remain small unless volatility decreases significantly [1]. Aluminum and Oil Positions - The short position in Aluminum has reached its highest level since May 2020, with potential unwinds impacting prices if futures rise [2]. - Trend followers have increased short positions in Crude Oil, indicating a potential for further selling [2]. Foreign Exchange Insights - The US Dollar has ended a four-week losing streak, which may slow down buying of EUR, GBP, and JPY by trend followers [3]. - Trend followers could be adding to long positions in Canadian and Korean bonds while gradually building US Treasury futures longs [3]. SPX Gamma Positioning - The report notes a muted gamma regime for SPX and VIX, suggesting limited impact on the equity market during potential selloffs [4][8]. - The current SPX gamma profile indicates that if the S&P rallies, gamma may grow increasingly short, while in a decline, it could remain dormant [4]. Trend Following Model - The CTA model indicates a short position for the S&P 500 with a projected bearish trend signal [24][25]. - The model suggests that a full unwind of the short position could occur with a 3.9% increase in the index level [25]. Leveraged and Inverse ETFs - US-based ETFs are projected to be responsible for approximately $733 million in S&P 500 buying and $1.7 billion in NASDAQ-100 selling per 1% move in the underlying index [79]. - The total AUM in S&P 500 and NASDAQ-100 leveraged and inverse ETFs is approximately $15 billion and $30 billion, respectively [80].

Investment Rating - The report indicates a neutral investment rating with the BofA Bull & Bear Indicator at 3.9, down from 4.1, suggesting a cautious approach to market positioning [69][70][75]. Core Insights - The report emphasizes the need for a decline in Treasury yields below 4% and earnings growth above 5% to support a bullish market outlook [2][15]. - It highlights a significant shift in capital allocation from the US to international markets, particularly Spain, with Spanish stocks up 25% YTD, contrasting with the decline in US equities [4][19]. - The report discusses the impact of macroeconomic factors, including the potential for Fed cuts, China peace negotiations, and resilient consumer spending, as critical elements for market recovery [15][18]. Summary by Sections Market Performance - Year-to-date performance shows gold at 26.2%, government bonds at 5.6%, while stocks are down 3.3% and cryptocurrencies down 25.6% [2]. - The report notes that 304 stocks in the S&P 500 and 58 in the Nasdaq 100 are currently trading below their 2021-22 highs, indicating a market correction [4]. Investment Flows - Weekly flows indicate $33.0 billion to cash, $9.2 billion to stocks, and $3.3 billion to gold, with outflows from bonds [12][49]. - BofA private clients show a significant allocation to low-volatility and high-dividend ETFs, reflecting a defensive investment strategy [14][55]. Economic Indicators - The report mentions that US household equity wealth has decreased by $6 trillion YTD, highlighting the impact of market conditions on consumer wealth [23][18]. - Inflation expectations have risen to the highest levels since 1981, which may influence consumer behavior and spending patterns [25][18]. Strategic Recommendations - The report suggests a strategy of buying dips in bonds and international assets while selling rallies in US stocks and the dollar [16][15]. - It advocates for a long-term view that favors necessities over luxuries, reflecting changing consumer priorities in the current economic climate [5][19].

Investment Rating - The report indicates a neutral investment rating with the BofA Bull & Bear Indicator at 4.1, down from 4.5, suggesting a cautious market sentiment [9][68]. Core Insights - The decade of the 2020s is characterized as a period of significant change, moving away from bullish globalization trends, with a conservative portfolio strategy (25% cash, bonds, gold, and stocks) outperforming the traditional 60/40 portfolio [4][26]. - The report highlights record inflows into gold ($8.0 billion) and significant outflows from bonds ($20.1 billion), indicating a shift in investor preferences [13][48]. - The Federal Reserve's stance has shifted from potential rate cuts to maintaining rates following a 20% market decline, with GDP growth forecasts also adjusting from +3% to -3% [3][17]. Summary by Sections Market Performance - Year-to-date performance shows gold at +25.3%, government bonds at +5.8%, while stocks are down -5.2% and cryptocurrencies down -34.0% [2]. - The S&P 500's 200-week moving average is currently at 4685, with the 50-week moving average at 5685, indicating a significant range for potential investment strategies [2]. Investment Flows - Weekly flows indicate $8.0 billion into gold, $7.9 billion into stocks, and $20.1 billion out of bonds, marking the largest outflow from cash since January 2025 [13][48]. - Private clients have reduced equity allocation from 63% to 60% due to price declines, with a notable shift towards utilities and low-volatility ETFs [15][53]. Economic Indicators - The BofA Global FMS sentiment survey indicates one of the most bearish outlooks in the past 25 years, with a strong correlation to previous market lows and subsequent rallies [17][19]. - The report emphasizes the importance of monitoring the ISM manufacturing report for signs of recession, particularly the new orders index [20][31]. Portfolio Strategy - The report suggests a long-term strategy focusing on bonds, international stocks, and gold to hedge against potential economic downturns and policy missteps [26][27]. - The average P/E ratio for the S&P 500 is projected to face a ceiling of 20x, reflecting a shift in market dynamics and investor expectations [26][35].

Investment Rating - The report indicates a neutral investment stance with a BofA Bull & Bear Indicator reading of 4.8, slightly down from 4.9, suggesting a cautious approach to risk assets [7][48]. Core Insights - The report discusses the transition from "US exceptionalism" to "US repudiation," highlighting a significant shift in foreign ownership of US assets, with foreigners holding 33% of US Treasuries, 27% of US corporate bonds, and 18% of US stocks [1][10]. - The report emphasizes the impact of higher US yields leading to lower stock prices and a weaker US dollar, which is driving global asset liquidation [2][17]. - It suggests that the S&P 500 valuation floor of 20x has now become a ceiling, indicating a bearish outlook for US equities [1][25]. Summary by Sections Treasury Ownership - Foreign ownership of US Treasuries has reached 33%, with the financial sector holding 31% and the government 24% [3]. Market Flows - There was a significant inflow of $48.9 billion into equities, driven by a $70.3 billion inflow to passive funds, while bonds experienced a $20.8 billion outflow [11][26]. - The report notes the largest weekly inflow into Treasuries at $18.8 billion and the largest outflow from high-yield bonds at $15.9 billion [16][27]. Economic Indicators - The report indicates that the US household equity wealth has decreased by $8 trillion year-to-date, following a $9 trillion increase in 2024, reflecting a negative wealth effect [18][22]. - The S&P 500 is projected to be priced-in around 4800, with expectations of a short and shallow recession [22][25]. Investment Strategies - The report recommends being long on 2-year Treasuries and short on the S&P 500 until there is a significant policy response from the Federal Reserve or a resolution in the US-China trade tensions [2][17]. - It advises investors to focus on high-quality corporate bonds yielding 5-6%, equities with strong dividend yields, and to consider emerging markets and commodities as potential investments [25][26].

Investment Rating - The report suggests an overweight (O/W) position in large-cap value stocks, particularly in sectors like Utilities, Energy, and Staples, which are expected to perform well in stagflationary conditions [2][8]. Core Insights - The report emphasizes that active managers are currently underweight in sectors that typically benefit from stagflation, such as Energy, Utilities, and Staples, despite a significant portion of investors expecting stagflation [8]. - It highlights that multinationals are perceived as quality investments due to their diversified income streams, with a shift in focus towards value over growth due to lower global sales exposure amid tariff risks [26]. - The report indicates that European equities have seen record passive inflows, suggesting a strong sentiment towards these markets [12][18]. Summary by Sections Investor Positioning - Mutual fund positioning is skewed towards US stocks with high foreign sales exposure, indicating a preference for these stocks despite trade war concerns [3][10]. - Long-only funds (LOs) are underweight in Energy, Utilities, and Staples, even though over 70% of surveyed investors expect stagflation [8][9]. - The report notes that LOs have significantly reduced their exposure to US Autos since the 2016 election, now being approximately 40% underweight [21]. Sector Performance - Historical data shows that Utilities, Staples, and Energy sectors have consistently outperformed during stagflationary periods, with average annualized returns of 10.7%, 10.3%, and 10.2% respectively [9]. - The report suggests that the value benchmark is a better hedge against stagflation compared to the growth benchmark due to its lower foreign exposure [2][26]. Passive vs. Active Investing - There has been a notable shift from active to passive investing, with passive equity flows exceeding 50% of total US assets under management (AUM) [56]. - The report indicates that the current market environment favors active strategies over passive index investing due to increased valuation dispersion, which presents opportunities for stock selection [61][66]. Hedge Fund Positioning - Hedge funds (HFs) are reported to have a low relative exposure to cyclical sectors compared to historical averages, with a significant focus on defensive sectors like Utilities and Communication Services [69][73]. - The report identifies Energy as the most shorted sector, indicating a bearish sentiment among hedge funds [71][75].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The consensus among experts indicates that additional US tariff hikes on Chinese products are likely, with China prepared to respond with countermeasures, although there is openness for bilateral dialogue [2] - Experts welcome the expansion of the fiscal budget deficit and a larger fiscal package, anticipating improvements in fiscal expenditure growth by 2025, but express concerns over weak corporate earnings and household income [3] - The People's Bank of China (PBoC) faces pressure to reduce effective interest rates, but near-term rate cuts are constrained by the need to maintain exchange rate stability [4] - Retail sales growth has shown improvement, leading to a more stabilized consumption outlook, though challenges remain due to the property market and income expectations [5] - The property market shows signs of recovery in land transactions, but experts caution against interpreting this as a full rebound, with price declines still present [8] Summary by Sections Trade - Experts agree on the likelihood of further US tariff increases and China's readiness to counteract, while also expressing a willingness for dialogue [2] Fiscal Policy - Expansion of the fiscal budget deficit is welcomed, with expectations for improved fiscal expenditure growth in 2025, but concerns remain regarding tax revenue and local fiscal shortfalls [3] Monetary Policy - The PBoC is under pressure to lower interest rates, but constraints exist due to the need for exchange rate stability and maintaining banks' net interest margins [4] Consumption - Retail sales growth has stabilized, but further fiscal support may be needed if growth continues to ease later in the year [5] Property Market - Recovery signs in land transactions are noted, but overall price stabilization remains elusive, with significant regional variations in sales trends [8][9]

Investment Rating - The investment rating for NVIDIA Corporation is maintained as BUY with a price objective of 200.00 USD, while the current price is 113.76 USD [1]. Core Insights - The report emphasizes the geopolitical risks associated with the implementation of the US government's "AI Diffusion Rules," which could impact NVIDIA's earnings. However, the valuation remains compelling, with an implied price-to-earnings (P/E) ratio of 20x to 26x for CY26, significantly below NVIDIA's historical average of 36x [1][21]. - The report outlines potential earnings per share (EPS) impacts ranging from 0% to 23% for CY26E due to direct exposure to China and the effects of the AI Diffusion Rules. Even in a bear-case scenario, the EPS is projected to be between $4.40 and $5.05, indicating an attractive P/E ratio of 22.5x to 26x [2][14]. - The anticipated recovery in gross margins (GMs) in the second half of the year is expected to be driven by the ramp-up of the B300 Blackwell Ultra products, which could restore upward momentum in EPS revisions [3][22]. Summary by Sections Earnings Estimates - EPS estimates for NVIDIA are projected as follows: 2024A: $1.30, 2025A: $2.99, 2026E: $4.50, 2027E: $6.07, 2028E: $6.77, with a year-over-year change of 293.9% for 2024A and 50.5% for 2026E [4]. Valuation Metrics - NVIDIA is currently trading at approximately 20x CY26E P/E, compared to a historical median of 36x. The PEG ratio is at 0.7x, below the typical range for high-growth companies [21][28]. Market Dynamics - The report highlights NVIDIA's transformation from a traditional PC graphics chip vendor to a key player in high-end gaming, enterprise graphics, cloud computing, and automotive markets, supported by a solid balance sheet and commitment to capital returns [10][9]. Scenario Analysis - The report presents three scenarios regarding potential sales impacts from China restrictions: 1. Bull-case: No impact, with EPS around $5.74. 2. Middle-case: Moderate impact, with EPS between $5.15 and $5.43. 3. Bear-case: Significant impact, with EPS between $4.40 and $5.05 [18][19][20]. Financial Performance - NVIDIA's sales are projected to grow significantly, with estimates of $60,922 million in 2024A, $130,497 million in 2025A, and $202,116 million in 2026E, reflecting a year-over-year change of 125.9% for 2024A [8]. Cash Flow and Returns - Free cash flow is expected to increase from $27,023 million in 2024A to $155,700 million in 2028E, indicating strong cash generation capabilities [8]. Competitive Position - NVIDIA's competitive position is bolstered by its leadership in AI chip technology, with a projected return on equity (ROE) of 97.6% for 2026E, showcasing its profitability and efficiency [6][8]. Conclusion - Overall, the report presents a positive outlook for NVIDIA, highlighting its growth potential despite geopolitical risks and market challenges, making it an attractive investment opportunity in the semiconductor sector [1][10].

Investment Rating - The report indicates a "neutral" investment rating for the China A-share market as of March 2025, with the W&W Indicator averaging at 50 and the daily reading at 33, suggesting a bullish sentiment [1][4]. Core Insights - The report highlights that while the overall sentiment is neutral, there are strong fund flows and very loose liquidity conditions. However, high leverage and negative earnings revisions present cautionary signals for the near-term outlook [1][3][17]. - The report maintains a structurally bullish view on the China market for the next 3-5 years, despite caution regarding the HK/ADR markets following a recent rally [1]. Summary by Categories Leverage - Leverage is reported at 71%, which is considered high. Margin trading as a percentage of A-share daily turnover is at 9.5%, exceeding the long-term average of 8.9% [2][19]. Valuation - The valuation is assessed at 54%, categorized as neutral. The current P/E ratio stands at 19.1x, which is below the long-term average of 21.2x [2][24]. Positioning - Positioning is very high at 89%, with 88.4% of stock mutual funds currently invested, surpassing the long-term average of 84.6% [2][31]. Liquidity - Liquidity is described as very loose, with the 10-year government bond yield rebounding to 1.83% in March 2025 from a record low of 1.6% in January 2025 [3][35]. Fund Flow - Fund flow is strong, with turnover/market cap at 176% in March 2025, significantly above the long-term average of 107% since 2007 [3][27]. Earnings - Earnings revisions are very negative, with the CSI 300 earnings downgrade improving from -12% YoY in September 2024 to -4.8% YoY in March 2025, although still significantly negative [3][40][43].