Inflation Trends - The August CPI showed a significant rebound, with a month-on-month increase from 0.2% in July to 0.38% in August, slightly above the market expectation of 0.33%[5] - Year-on-year CPI growth rose from 2.7% to 2.9%, indicating a return to an upward trend[5] - Core CPI month-on-month growth increased from 0.32% to 0.35%, also exceeding market expectations of 0.31%[5] Employment Concerns - The number of first-time unemployment claims rose by 27,000 to 263,000, the highest level since October 2021, significantly surpassing the market expectation of 235,000[6] - The projected increase in employment from April 2024 to March 2025 was revised down by 91,100, with average monthly job growth adjusted from 136,000 to 60,000[6] - The risk of employment deterioration is now seen as greater than the risk of uncontrolled inflation, leading to an 81% probability of three rate cuts this year[1] Federal Reserve Actions - The Federal Reserve is expected to cut rates twice, in September and December, totaling a 50 basis point reduction, with the year-end target for the federal funds rate set at 3.75%-4%[1] - Further rate cuts are anticipated next year, potentially bringing the year-end target down to 3.25%-3.5% as economic growth stabilizes and inflation recedes[1]

Report Summary Industry Investment Rating - No industry investment rating is provided in the report. Core Viewpoints - The fixed - income market shows mixed performance. New issues generally tightened, while the secondary IG space was largely unchanged. Greater China high - beta credits were mostly stable, and there were price movements in various bonds across different regions [2]. - LGFVs had a mixed performance, with demand for higher - grade USD issues but lackluster performance for higher - yielding names due to supply jams. Trading volumes were thin ahead of US consumer inflation data [3]. Section Summaries Market Performance - **Yesterday's Performance**: The new NSINTW 5 7/8 03/17/41 tightened up to 15bps from RO at T + 185 and closed 10bps tighter. Other TW lifers CATLIFs/SHIKON/FUBON closed 1 - 2bps tighter. The new KHFC 3 7/8 09/17/30 and the new KOMATS 4.196 30 tightened 2 - 3bps. Secondary IG space was largely unchanged. In Chinese properties, VNKRLE 27 - 29s were down 0.5pt, and GRNLGR 28 - 31s were 0.3 - 0.5pt lower. LNGFOR 28 - 32s were 0.2 - 0.3pt higher. Japanese insurance hybrids and AT1s were up 0.3pt, and their Yankee counterparts were 0.1pt firmer. The new SMPHPM 4.75 09/16/30 was 0.1pt higher than RO at 99.8. PTTGC 51 - 52s tightened 1 - 13bps [2]. - **This Morning's Performance**: The new NSINTW 5 7/8 03/17/41 tightened another 7bps. The rest of TW lifers CATLIFs/SHIKON/FUBON were 2 - 5bps tighter. The recent HYUELE 28 - 30s were 1 - 2bps tighter. BBLTB sub - curve tightened 5bps. The recent MUFG Perp/SUMILIF 55/FUKOKU rose 0.5 - 1pt. HYSAN 7.2 PERP was up 0.5pt. TOPTBs were unchanged [4]. - **Top Performers and Underperformers**: Top performers included CCAMCL 5 02/08/48 (up 3.0), FAEACO 12.814 PERP (up 2.9), etc. Top underperformers included BIMLVN 7 3/8 05/07/26 (down 0.7), VNKRLE 3 1/2 11/12/29 (down 0.5), etc. [5] Macro News - On Thursday, S&P (+0.85%), Dow (+1.36%) and Nasdaq (+0.72%) were higher. The US Aug'25 Core CPI was +0.3% mom, and the US CPI was +2.9% yoy, both in line with market expectations. The US Aug'25 CPI was +0.4% mom, higher than the market expectation. The US Initial Jobless Claims was +263k, higher than the prediction. UST yield was lower, with 2/5/10/30 - year yields at 3.52%/3.59%/4.01%/4.65% [7]. Company - Specific Analysis (HYSAN) - Hysan raised junior subordinated 5NC2 notes of USD17mn, rated Ba1 by Moody's, callable at 103.375 in Sep'27, with a coupon rate of 6.75% and deferrable and cumulative coupon [8]. - The small private placement is to build a cushion of junior securities to keep the rating of HYSAN 7.2 PERP at IG. In 1H25, Hysan's turnover and EBIITDA grew 2.1% and 1.4% yoy to HKD1.7bn and HKD1.3bn respectively. Occupancy rates of retail/office/residential were 94%/92%/70% as of Jun'25. Its liquidity profile is solid with cash to ST debts at 2.3x, and it has a capital recycling plan of HKD8bn over the next 5 years. The net gearing ratio (perp as debt) was 33% as of Jun'25 [9][10]. - Analysts are neutral on HYSANs on valuation but consider HYSAN 7.2 PERP to offer the best risk - return profile compared to other Hysan bonds [11]. New Issues - There were no offshore Asia new issues priced or in the pipeline on the reporting day [12][13]. - Regarding onshore primary issuances, 101 credit bonds were issued yesterday with an amount of RMB160bn. Month - to - date, 658 credit bonds were issued with a total amount of RMB638bn, representing an 18.6% yoy increase [15]. Other News - Adani and Vedanta are bidders for bankrupt GVK Energy. Alibaba uses its own microprocessors for AI model training. BHP will divest a 15% stake in iron ore deposit. Evergrande's property management arm received non - binding bids. Fosun signed a USD910mn sustainability - linked syndicated loan. Meituan plans to issue dim sum bonds. POSCO International signed a deal for LNG import. Pertamina plans subsidiary reorganization. PTT Global Chemical issued USD1.1bn unsecured subordinated perp. Reliance boosted asset - backed notes size. Yuexiu Property signed a HKD200mn term loan facility agreement [15].

Global Market Overview - The Hang Seng Index closed at 26,086, down 0.43% for the day but up 30.04% year-to-date [1] - The Shanghai Composite Index rose by 1.65% to 3,875, with a year-to-date increase of 15.62% [1] - The US markets saw the Dow Jones increase by 1.36% to 46,108, with a year-to-date gain of 8.38% [1] Sector Performance - In the Hong Kong market, the healthcare, energy, and consumer discretionary sectors led the decline, while materials, utilities, and industrials saw gains [3] - The semiconductor and rare metals sectors performed notably well, with significant inflows from southbound funds amounting to HKD 189.89 billion [3] Economic Indicators - The European Central Bank (ECB) maintained interest rates and revised down its inflation forecast for 2027 to 1.9% [3] - The US Consumer Price Index (CPI) showed a month-on-month increase of 0.4% and a year-on-year increase of 2.9%, aligning with market expectations [3] Investment Recommendations - Geely Automobile is rated as a "Buy" with a target price of HKD 25.00, representing a potential upside of 33% [4] - Luckin Coffee is also rated as a "Buy" with a target price of USD 44.95, indicating a 19% upside [4] - Semiconductor companies like Horizon Robotics and Beike Micro are rated as "Buy" with target prices of HKD 12.30 and HKD 93.00, respectively, showing potential upsides of 19% and 76% [4]

Macro Analysis - The CPI in China fell to -0.4% YoY in August due to a sharp decline in food prices, while the core CPI rose to 0.9% YoY [2][5] - PPI's YoY decline narrowed to -2.9%, indicating a potential recovery in upstream material prices [5] - The continuation of deflation is expected to prompt further policy actions, with a focus on countering "involution" [2][5] Industry Insights - The technology sector saw significant developments with Apple's recent product launch, including the iPhone 17 series and AirPods Pro 3, which are expected to drive a replacement cycle [6] - The pricing strategy for Apple's new products was better than market fears, with most prices remaining stable except for a $100 increase on the iPhone Pro [6] - The demand for AI-related products remains strong, as evidenced by TSMC's sales growth of 33.8% YoY in August [5][6] Stock Recommendations - Geely Automobile (175 HK) is rated as a "Buy" with a target price of 25.00, representing a 37% upside potential [7] - Luckin Coffee (LKNCY US) is also rated as a "Buy" with a target price of 44.95, indicating a 21% upside [7] - Tencent (700 HK) and Alibaba (BABA US) are both rated as "Buy" with target prices of 705.00 and 158.80 respectively, showing potential upsides of 11% and 10% [7]

Group 1: Market Overview - Global markets showed mixed performance, with the Hang Seng Index closing at 25,938, up 1.19% year-to-date, while the Shanghai Composite Index fell by 0.51% [1][3] - Southbound capital recorded a net inflow of HKD 10.231 billion, indicating strong interest in Hong Kong stocks [3] - Commodities displayed divergence, with precious metals, coal, and steel prices rising, while chemicals and agricultural products declined [3] Group 2: Company Analysis - 康方生物 (Summit) - 康方生物's AK112 showed improved overall survival (OS) data in long-term follow-up, with a median OS of 16.8 months compared to 14.0 months for chemotherapy alone, indicating a positive trend [6][7] - The company is expected to present further OS data from the HARMONi-2 study in the next six months, which could enhance investor confidence [6][7] - The target price for 康方生物 is maintained at HKD 182.12, reflecting a strong outlook for its first-line indications in NSCLC [7] Group 3: Company Analysis - 江南布衣 - 江南布衣 reported encouraging retail sales growth, improving from low single-digit growth in Q1 to double-digit growth in July-August, driven by low base effects and strong performance in outlet channels [8][9] - The management provided a conservative sales growth guidance for FY26, aiming for high single-digit growth, supported by multiple drivers including new brand contributions [8][9] - The target price for 江南布衣 has been raised to HKD 23.30, based on a 12x FY26 forecast P/E ratio, reflecting confidence in its sales and profit resilience [9][10]

2025 年 9 月 9 日 招银国际环球市场 | 策略报告 | 宏观视角 全球宏观策略 Macro Strategy - 美国重振工业与中国反内卷 全球经济放缓，但白宫对美联储干预和中国反内卷可能推动通胀反弹，央行面临 挑战。中美经济再平衡政策启动，美国以高关税、低税率、低油价、低利率和贸 易协定推动产业投资，以建立强大自主制造业体系，中国将适度扩大财政刺激， 增加对家庭支持，加快去产能，保持人民币稳中偏强，促进进口。全球国债收益 率可能小幅回落，美元可能走弱，股市或小幅上涨，大宗商品价格温和走高。 叶丙南, Ph.D (852) 3761 8967 yebingnan@cmbi.com.hk 刘泽晖 (852) 3761 8957 frankliu@cmbi.com.hk 敬请参阅尾页之免责声明 请到彭博 (搜索代码: RESP CMBR )或 http:// www.cmbi.com.hk 下载更多招银国际环球市场研究报告 1 MN 美国重振工业与中国反内卷 美国：短期滞涨风险。GDP 同比从上半年 2%降至 3Q 的 1.7%和 4Q 的 1.3%，从 2024 年 2.8%降至 2025 年 1.7 ...

Macro Commentary - The report indicates that China's exports are beginning to slow down due to previous over-demand and tariff impacts, with exports to the US declining further, while resilience in exports to ASEAN partially offsets this decline [4] - The report forecasts that China's export growth may face downward pressure for the remainder of the year, predicting a slowdown from 5.9% in 2024 to 3% in 2025, while import growth is expected to slightly rise from 1.1% to 1.5% [4] Market Performance - The report highlights that the Chinese stock market is leading emerging markets in attracting ETF inflows, with a net inflow of $1.02 billion into emerging market ETFs in the week of September 5, with Chinese ETFs attracting the largest share at $302 million [3] - The report notes that major global stock indices, including the Nasdaq and S&P 500, have rebounded, with the Nasdaq reaching a historical high [3] Sector Performance - In the Chinese market, industries such as industrials, paper, and machinery are leading the gains, while durable consumer goods, media, and daily consumption sectors are experiencing declines [3] - The report mentions that basic metal prices are mixed, with most agricultural products declining, indicating a varied performance across sectors [3] Company Focus - The report lists several companies with buy ratings, including Geely Automobile (175 HK) with a target price of 25.00, representing a 37% upside potential, and Luckin Coffee (LKNCY US) with a target price of 44.95, indicating a 22% upside [5] - The report also highlights companies in the semiconductor sector, such as Horizon Robotics (9660 HK) and North Huachuang (002371 CH), both rated as buy with significant upside potentials of 17% and 24% respectively [5]

Market Strategy - The report indicates that there is still upward potential in the market, with recommended stocks including Zhongji Xuchuang (300308 CH), Shengyi Technology (600183 CH), Horizon Robotics (9660 HK), and others [1][11] - The software and IT services sector is expected to see accelerated revenue growth for leading overseas internet companies in Q2 2025, driven by sustained demand despite supply constraints [1] Macro Economic Outlook - The Chinese economy is experiencing a slowdown, with GDP growth expected to decline from 5.2% in Q2 to 4.9% in Q3 and 4.6% in Q4, with an annual forecast of 5% [12] - The report anticipates that macro policies may be re-energized, with potential interest rate cuts and increased fiscal expansion to stimulate consumption [12][15] Technology Sector - The technology sector remains optimistic, with Q2 earnings generally exceeding expectations, driven by lower-than-expected tariff impacts and strong demand for AI servers [2] - The report highlights significant growth in AI-related products, including a 222% year-on-year increase in global AI glasses shipments in Q2 [2] Semiconductor Industry - The semiconductor industry is expected to maintain high growth driven by policy benefits, global capital expenditure, and domestic substitution [2] - The report notes that major cloud service providers are expected to increase capital expenditures by 42.7% year-on-year by 2025, indicating strong demand for AI infrastructure [2] Consumer Sector - The report expresses a cautious outlook for certain consumer segments, particularly tea and coffee, hotels, and home appliances, while being more optimistic about dining, apparel, and sports goods [4] - It suggests focusing on companies that benefit from consumer downgrading and high dividend yields, recommending stocks like Luckin Coffee (LKNCY US) and Anta (2020 HK) [4] Automotive Industry - The automotive sector is seeing a seasonal recovery, with a projected 6% month-on-month increase in retail sales in August, driven by new energy vehicle sales reaching historical highs [6] - Recommended stocks include Geely (175 HK) and Li Auto (LI US), which are expected to launch new models and continue strong sales performance [6] Real Estate Sector - The report maintains an optimistic outlook for the real estate sector, with expectations of policy easing in major cities like Beijing and Shanghai [7] - It recommends focusing on developers with strong commercial operations and those benefiting from the stock market recovery, such as Longfor Group (960 HK) [7] Insurance Sector - The insurance sector is viewed as moderately optimistic, with listed insurers showing improved profitability driven by strong performance in equity markets [8] - The report suggests a focus on high-dividend stocks and long-term equity investments as a strategy to navigate the low-interest-rate environment [8] Capital Goods - The capital goods sector is expected to see continued strong growth, particularly in emerging markets, with recommendations for companies like SANY Heavy Industry (600031 CH) and Zoomlion (1157 HK) [10] - The report highlights the resilience of the engineering machinery and heavy truck sectors, with expectations of strong sales growth in the coming quarters [10]

Report Industry Investment Rating - Not provided Core View of the Report - Longfor has shown good debt maturity management and debt reduction ability despite weak 1H25 results The growing contribution from investment properties and property management partly offsets the impact of weak property sales and margin pressure The current valuation of LNGFORs offers good carry plays, so the buy rating on LNGFORs is maintained [7] Summaries by Relevant Catalogs Trading Desk Comments - Last Friday, HYUELE 28 - 30s tightened 2 - 3bps, SHIKON 35 tightened another 10bps, CATLIFs/NSINTW 34 tightened 4 - 8bps, and FUBON 35 was 5bps tighter Japan - related bonds like KYUSEL 35/NOMURA 35 etc were 3 - 5bps tighter Some PERP bonds increased in price MEITUA curve was under pressure, while FOSUNI 28 - 29s saw buying and the new FOSUNI 29s firmed slightly Macau gaming bonds had price changes ranging from 0.1pt lower to 0.3pt higher MTRC PERPs were 0.3pt higher and LIHHK 4.8 06/18/26 was down 0.8pt LNGFOR 27 - 32s climbed 0.5 - 0.9pt BBLTB subs in Southeast Asia were 3 - 5bps tighter Renew Energy complex bonds like RPVIN 28/RNW 26/INCLEN 27 were 0.1 - 0.2pt higher RILIN 45 - 62s rose 1.6pts and VLLPM 9 3/8 07/29/29 dropped 1.9pts [2] - This morning (8 Sep 2025), HYUELE 4.25 28/4.375 30 widened 1 - 2bps, TW lifers CATLIFs/FUBON/NSINTW/SHIKON were 1 - 2bps wider, ZHOSHK 28 widened 5bps Asia Perps were 0.3 - 0.5pt higher with better institutional buying LNGFOR 28 was 0.1pt lower and others were unchanged SHUION 26 was 0.4pt higher as Shui On plans to issue USD bonds for refinancing [3] Top Performers and Underperformers - Top Performers include CHGDNU 4.8 09/11/48 with a price of 91.5 and a change of 1.9, TAISEM 3 1/4 10/25/51 with a price of 76.6 and a change of 1.7 etc [4] - Top Underperformers include VLLPM 9 3/8 07/29/29 with a price of 62.6 and a change of -1.9, LIHHK 4.8 06/18/26 with a price of 93.6 and a change of -0.8 etc [4] Macro News Recap - Last Friday, S&P (-0.32%), Dow (-0.48%) and Nasdaq (-0.03%) were lower US Aug'25 nonfarm payrolls was +22k, lower than the market expectation of +75k, and the unemployment rate was 4.3% as expected UST yield was lower, with 2/5/10/30 - year yields at 3.51%/3.59%/4.10%/4.78% [6] Desk Analyst Comments - LNGFOR has passed through the repayment hump, and the buy rating on LNGFORs is maintained [7] Offshore Asia New Issues - No new offshore Asia issues were priced today [10] - Pipeline issues include Petron Corp with PerpNC3 tenor at 7.35% (unrated), Shaoxing Shangyu State - owned Capital with 3 - year tenor at 4.8% (unrated), and Westpac with 5 - year tenor at T + 85 (A1/AA - /A +) [11] News and Market Color - Yesterday, 83 credit bonds were issued onshore with an amount of RMB54bn Month - to - date, 278 credit bonds were issued with a total amount of RMB207bn, a 17.2% yoy decrease [15] - Shenzhen eased home purchasing rules Moody's withdrew the Baa2 rating of AVIC Industry - Finance Alibaba reduced its stake in Singapore Post, cashing out SGD65mn (cUSD50.4mn) Central Huijin became China Cinda's largest shareholder with 58% stake Wanda Group plans to raise up to USD200mn in private debt Emperor International will sell Macau properties for HKD90mn (cUSD11.5mn) LG Electronics aims to double European sales in five years Fitch revised Meituan's outlook to stable from positive S&P revised Zhongsheng's outlook to negative from stable [15]

Investment Rating - The industry is rated as "Outperform" indicating that the sector is expected to perform better than the market benchmark over the next 12 months [57]. Core Insights - The overall performance of the pharmaceutical industry in China remains weak, with average revenue growth of 1.6% and average net profit declining by 3.2% in the first half of 2025. This is a deterioration compared to the full year of 2024, where revenue growth was 3.2% and net profit declined by 1.4% [5][6]. - The innovative drug sector (Biotech) continues to show strong performance, with an average revenue growth of 35% in 1H25, supported by favorable medical insurance payment policies and successful overseas licensing deals [4][9]. - The pharmaceutical sector (Pharma) shows stable performance with an average revenue growth of 0.8% and net profit growth of 3.4% in 1H25, benefiting from a rich pipeline of innovative drugs [4][9]. - The CXO sector has seen significant recovery, with average revenue growth of 15.5% and net profit growth of 32.7% in 1H25, driven by strong demand for commercial production [37]. - The medical device sector is experiencing mixed performance, particularly the IVD segment, which saw a revenue decline of 14% in 1H25 due to policy impacts and price competition [14][8]. Summary by Sections Pharmaceutical Industry Performance - The average revenue growth for A-share and Hong Kong-listed pharmaceutical companies was 1.6% in 1H25, with net profit declining by 3.2% compared to 2024 [5][6]. - The innovative drug segment remains robust, with a 35% revenue increase, while the traditional generic drug business is under pressure [4][9]. CXO Sector - The CXO sector's revenue grew by 15.5% and net profit by 32.7% in 1H25, largely due to low base effects and strong demand for commercial production services [37]. Medical Devices - The IVD segment faced significant challenges, with a 14% revenue decline in 1H25, attributed to policy changes and competitive pricing pressures [14][8]. - Despite some recovery in medical device tenders, the overall market remains under pressure due to ongoing inventory clearance and competitive dynamics [14]. Future Outlook - The pharmaceutical industry is expected to benefit from the optimization of domestic procurement policies and the continued growth of innovative drug exports, although caution is advised regarding stock price increases [38]. - The report recommends buying shares in companies such as Sangamo Therapeutics (1530 HK), Junshi Biosciences (2367 HK), WuXi AppTec (2268 HK), and others due to their strong growth potential [38].