Investment Rating - The report indicates an upgrade for truckers, suggesting a lessened probability of recession and a resilient consumer [12]. Core Insights - The inbound traffic from China to the US has shown slight sequential downticks of -7% for vessels and -4% for TEUs, indicating a potential moderation in the China surge [1][3]. - Year-over-year growth for laden vessels from China to the US accelerated to the high teens, despite the recent sequential decrease [3][19]. - The report outlines two potential scenarios for 2025: a pull-forward surge ahead of a 90-day tariff pause or a slowdown in activity/orders due to uncertainty [6][9]. - The report suggests that if the economy does not fall into recession and tariff issues stabilize, retailers may face inventory shortages leading to a surge in orders in the second half of 2025 [9]. Summary by Sections Tariff Impact and Trade Patterns - The report tracks high-frequency data to assess the impact of tariffs on global supply chains, noting that the data can be volatile but informative over a multi-week basis [4][5]. - The recent data indicates that traffic from China to the US is outpacing that of Asia, ex-China, with a +16% year-over-year increase for TEUs [3][25]. Freight Demand and Container Rates - Container rates have shown a sequential drop of -2%, potentially foreshadowing a demand drop post the initial surge from China [3]. - Planned TEUs into the Port of Los Angeles increased by +23% sequentially, reflecting the volatility of shipper decisions [37]. Economic Outlook and Inventory Trends - The report highlights that logistics managers' inventory levels are expanding upstream while compressing downstream, indicating a potential mismatch in supply and demand [68][73]. - The Logistics Managers Index shows higher inventory costs, reflecting increased storage costs as inventory builds before moving to consumers [74]. Port Activity and Shipping Volumes - Major ports in the US experienced a -10% year-over-year decline in volumes, with a significant drop of -22% sequentially from April to May [53][59]. - The report notes that the Big Three ports (LA, Long Beach, Oakland) are seeing a strong relationship between inbound volumes and TEU growth from Asia [58][61].

Investment Rating - The report maintains a market neutral carry strategy preference for Asia credit, indicating a stable outlook despite geopolitical tensions [6][10]. Core Insights - The China Property High Yield (HY) sector has shown a total return of 14.3% in 2025, reflecting a recovery from previous oversold conditions rather than fundamental improvements in the property market [10][11]. - Urban demand for new properties in China is projected to remain slightly below 5 million units per year, which is 75% lower than the peak of 20 million units in 2017 [5][10]. - The restructuring of China property developer debts is expected to be a gradual, multi-year process unless there is a significant policy shift [11][17]. Summary by Sections Asia Credit Overview - Asia credit spreads remained stable despite rising geopolitical tensions and oil price fluctuations, with a preference for maintaining carry strategies [6][10]. - The report highlights that Asia has consistently generated the best Sharpe ratios in Emerging Market Investment Grade (EM IG) credit, supported by strong technicals [4][7]. China Property Sector - Recent positive micro news includes Seazen Group's issuance of a USD 300 million bond and Moody's positive outlook revision for the company [10]. - The cleanup of debts in the China property sector is ongoing, with total debt outstanding for property developers stabilizing around RMB 19 trillion since 2021 [11][17]. - The report emphasizes a positive stance on China BBB and BB rated property companies, as policymakers aim to mitigate systemic tail risks [5][17]. Market Performance - The ICE-BAML Asia Dollar China Property HY index's performance indicates a rebound, but the report cautions that this is not indicative of a fundamental recovery in the physical property market [10][11]. - The report forecasts that primary market gross floor area (GFA) sold will decline by 8% in 2025 and 6% in 2026 before stabilizing [17].

Investment Rating - The report indicates a positive outlook on China's export resilience, highlighting strong growth in exports, particularly to emerging markets [2][3]. Core Insights - China's exports have demonstrated surprising strength, achieving double-digit growth since Q4 2023, driven by factors such as front-loading of export orders and trade re-routing [2][3][4]. - The report emphasizes the shift of China's export flows from developed markets to emerging markets, particularly ASEAN, which has become a key trading partner [2][3][4]. Summary by Sections Export Growth Dynamics - Real exports from China have shown double-digit year-over-year growth since Q4 2023, with significant contributions from emerging markets [2][3]. - Front-loading of export orders has played a crucial role in maintaining high export levels, particularly in anticipation of US tariffs [5][6]. Trade Patterns and Destinations - Exports to ASEAN accounted for 16% of China's total exports in 2024, surpassing exports to the US, indicating a strategic shift in trade routes [2][3][4]. - The report notes that strong trade growth with major emerging economies has been a significant contributor to China's export strength over the past decade [2][3]. Sectoral Analysis - Exports of vehicles and electrical machinery to emerging markets have risen sharply, driven by supply chain diversification and increasing local demand for electric vehicles [2][3][4]. - The report highlights a transition in China's export product mix from traditional goods to new sectors such as electric vehicles, lithium-ion batteries, and solar cells [26][35]. Impact of US Tariff Policies - US tariff policies have induced front-loading and trade re-routing, which have helped stabilize China's overall export growth despite a decline in US-bound exports [5][6][18]. - The report estimates that cumulative front-loading of US-bound exports during Q4 2024 to Q1 2025 was around 30% of trend-implied monthly export values [5][6]. ASEAN's Role in Trade - The ASEAN-China Free Trade Agreement has significantly reduced tariffs, contributing to the rise in ASEAN-bound exports from China [37]. - Trade data discrepancies suggest potential transshipment of goods through ASEAN to avoid US tariffs, indicating a complex trade dynamic [39][41].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The effective US tariff rate is projected to increase by approximately 14 percentage points by 2025, which is significantly higher than the 2 percentage point increase during the first Trump administration but lower than the previously assumed 20 percentage point increase [1] - The stabilization of the tariff outlook has contributed to easing financial conditions and a reduction in policy uncertainty, leading to a revised core PCE inflation forecast of 3.4% for December 2025 and an increase in the US growth forecast to 1.25% on a Q4/Q4 basis [1] - The probability of a US recession has been reduced to 30%, although geopolitical risks, particularly regarding potential military action against Iran, could influence this outlook [2][8] Economic Indicators - Real GDP is estimated to grow by 4.1% in Q2 2025 following a contraction of 0.2% in Q1 2025, although labor market indicators suggest a moderate deceleration with job growth slowing and an increase in jobless claims [5] - Core PCE inflation is expected to show modest growth of 0.18% in May, but concerns remain regarding tariff-driven price increases, with each 1 percentage point increase in tariffs estimated to add about 0.1% to core PCE [9] - Long-term inflation expectations appear to be anchored, which may limit second-round inflation effects from tariff increases [10] Monetary Policy Outlook - The Federal Open Market Committee (FOMC) is expected to consider a single 25 basis point cut in December 2025, with two additional cuts anticipated in 2026, although risks to this baseline are tilted to the downside due to potential labor market slowdowns [12] - The European Central Bank (ECB) is projected to implement one more cut in September, with risks remaining to the downside due to ongoing economic slowdowns [18] Fiscal Policy and Deficit - The fiscal bill currently in Congress is expected to raise the deficit to unsustainable levels, projected at 6% of GDP overall and 3% excluding interest payments, which could impact foreign direct investment and equity portfolio inflows [16][17] Global Economic Context - The Chinese economy has shown resilience despite a 34.5% year-on-year decline in shipments to the US, with overall nominal export growth at 4.8% year-on-year in May [22] - The US dollar has weakened further, with predictions of significant depreciation against various currencies, driven by high valuations and challenges in attracting capital inflows [26][28]

Investment Rating - The report indicates an increased geopolitical risk premium of $12 per barrel for Brent oil prices, reflecting a higher probability of supply disruptions due to escalating tensions in the Middle East [2][5][3]. Core Insights - The Brent oil price has risen to just under $80 per barrel, with expectations of potential price increases due to supply disruptions, particularly from Iran [3][2]. - The Polymarket prediction market shows a 52% chance that Iran will close the Strait of Hormuz in 2025, up from just over 30% previously [3][2]. - Two main disruption scenarios are analyzed: a reduction in Iranian oil supply and broader regional disruptions affecting oil production and shipping [9][18]. Summary by Sections Oil Price Scenarios - If Iranian oil supply drops by 1.75 million barrels per day (mb/d), Brent prices could peak around $90 per barrel [10][12]. - A scenario where oil flows through the Strait of Hormuz drop by 50% for one month could see Brent prices reach approximately $110 per barrel [15][20]. - The report anticipates that European natural gas prices (TTF) may rise closer to 74 EUR/MWh ($25/mmBtu), reflecting a higher probability of significant supply disruptions [33][34]. Geopolitical Context - The report emphasizes the importance of the Strait of Hormuz, through which nearly 20% of global oil flows transit, and the potential impact of disruptions on global energy prices [30][19]. - A hypothetical large disruption could push oil prices above $110 per barrel, given a 20% disruption to global energy supplies [30][32]. Natural Gas Market Implications - The TTF price increase since the onset of the Israel-Iran conflict suggests an 11% market-implied probability of a sizable LNG supply disruption [34][35]. - A sustained disruption in natural gas supply could lead to European prices exceeding 100 EUR/MWh [37]. US Natural Gas Market - The report notes that the impact of a global LNG supply disruption on US natural gas prices would be limited due to the US being a large net exporter of LNG [39][40].

Investment Rating - The report indicates a positive investment sentiment towards global equity and fixed income funds, with significant inflows observed in the latest reporting period [4][10]. Core Insights - Global fund flows into equity funds saw a substantial increase, with net inflows of $45 billion for the week ending June 18, compared to outflows of $10 billion in the previous week. This surge was primarily driven by strong demand from US investors for US equity funds [4][10]. - Fixed income funds also experienced increased inflows, totaling $19 billion, attributed to heightened demand for aggregate-type, mortgage-backed, and government bond funds. In contrast, money market fund assets declined by $12 billion [4][10]. - Emerging markets showed positive trends, particularly with mainland China funds turning positive and Brazil continuing to attract robust inflows. Sector-wise, technology funds recorded the strongest net inflows, while financials faced the largest outflows [4][10]. Summary by Category Equity Flows - Total equity inflows amounted to $31.3 billion over the four-week period, with a significant weekly inflow of $45.4 billion on June 18. Developed markets, particularly the US, saw notable inflows, while Japan experienced outflows [10][12]. - Technology sector funds led the inflows, while financials and healthcare sectors faced significant outflows [10][12]. Fixed Income Flows - Total fixed income inflows reached $70.8 billion, with a weekly inflow of $19.2 billion. Aggregate-type and mortgage-backed funds were particularly favored, while long-duration bond funds saw outflows [10][12]. - Emerging market local bond funds attracted strong inflows, indicating a positive sentiment towards these assets [10][12]. FX Flows - Cross-border FX flows totaled $58.2 billion, with G10 currencies showing strong demand, particularly for the Korean won, which saw the largest net inflows in z-score terms [12][13]. - The report highlights subdued inflows for the US dollar, contrasting with robust inflows for other currencies like the euro and British pound [12][13].

Investment Rating - The report indicates a cautious outlook on the Chinese automotive industry, particularly regarding the overcapacity situation and reliance on government stimulus measures [1][7]. Core Insights - The expansion of new energy vehicle (NEV) capacity in China is slowing, with an expected increase of 2.5 million units by 2025, representing a 13% year-on-year growth, down from 5.5 million in 2023 and 3.2 million in 2024 [1][3]. - The Chinese automotive market remains fragmented, with the top ten manufacturers holding less than 80% market share, indicating potential for consolidation and improved profitability [1][6]. - Government stimulus measures, particularly the doubling of trade-in subsidies in July 2024, have significantly boosted demand, with 6.1 million applications last year, highlighting a high dependency on these measures [1][5]. - The report suggests that the recent improvement in profitability for the top thirteen manufacturers may be temporary due to increased supply chain pricing pressures [1][6]. Summary by Sections Production Capacity and Market Dynamics - NEV capacity is projected to grow by 2.5 million units by 2025, with a slowdown in growth compared to previous years [1][3]. - The market remains fragmented, with less than 80% market share held by the top ten manufacturers, compared to over 90% in mature markets like the US and Japan [1][6]. Government Stimulus Impact - Government trade-in subsidies have significantly influenced demand, with 28% of 2024 sales attributed to these measures, and 31% in the first five months of 2025 [1][8]. - The budget for trade-in subsidies is set to increase from 150 billion RMB in 2024 to 300 billion RMB in 2025, supporting an estimated 2.4 million units of stimulated demand [1][9]. Future Market Trends - Potential market demand is expected to grow in line with GDP, with NEV penetration stabilizing around 70% after 2025 [2][11]. - The report anticipates a gradual decline in sales growth rates post-2026, with a return to a 10% annual growth rate after 2030 [2][11]. Company Performance and Outlook - Companies like XPeng are expected to improve their performance through competitive new models and cost reduction strategies, with significant growth potential in their latest offerings [15][16]. - BYD aims to export 800,000 vehicles by 2025, with a strong performance in overseas markets, particularly in Western Europe [22][21]. Industry Consolidation and Challenges - The report predicts significant industry consolidation may occur around 2027 or 2028, driven by a lack of substantial growth potential [20]. - The increasing importance of export growth for manufacturers is highlighted, as domestic market growth slows and competition intensifies [19][21].

18 June 2025 | 12:37AM HKT Kingdee (0268.HK): AI agent 2.0 to empower financial/ travel/ HR/ knowledge AI; profitability improvement remains key focus; Buy We reiterate our Buy rating on Kingdee on release of Cosmic Agent 2.0 platform, which has features covering financial, travel, recruiting etc., which is empowered by multiple AI foundation models. We expect the company to continue expanding agents to AI sales, AI operations, AI decision-making etc., and enable AI agents to provide customized experiences ...

Investment Rating - The report maintains a "Buy" rating on JD and Kuaishou, while also maintaining "Buy" on Meituan, Alibaba, and Pinduoduo, with a "Neutral" rating on VIPS [14]. Core Insights - The China eCommerce industry experienced approximately 10-11% gross GMV growth during the 2025 618 shopping festival, supported by a 15% year-over-year increase in parcel volume [1][2]. - The growth was driven by national subsidies on electronics and appliances, with competition normalizing across platforms [2]. - JD emerged as the fastest-growing shelf-based incumbent with an estimated GMV growth in the mid-teens percentage year-over-year, significantly increasing its transacting users by 100% [3][9]. - There is a notable shift towards on-demand eCommerce, with platforms like Meituan and JD focusing on instant retail rather than live-streaming eCommerce [10]. - Generative AI tools have proliferated, enhancing merchant efficiency and conversion rates during the festival [13]. Summary by Sections Broader Picture of the Festival - The overall GMV growth for the industry was estimated at 10-11%, with parcel volume growth at 15% year-over-year during the festival period [1][2]. - The narrowing gap between GMV and parcel volume growth indicates a lower return rate and fewer refunds without return orders [2]. eCommerce Platform Strategy During 618 Shopping Festival - Platforms focused on simplifying promotional activities and supporting merchants to lower operational costs [11][47]. - JD's innovative food delivery model and Meituan's significant order volume growth highlight the competitive landscape shift [10][11]. Engagement Data - The average daily active users (DAU) among top eCommerce platforms increased, with JD experiencing a historical high in DAU during the festival [50][53]. - Time spent on eCommerce apps increased by 10% year-over-year in May 2025, with JD and Pinduoduo showing significant growth [51]. Key Strategies and Merchant Support Measures - Various platforms implemented measures to support merchants, including commission rebates and reduced operational costs [11][47]. - Douyin introduced multiple merchant support policies, saving merchants a total of Rmb11 billion from January to May [11].

Investment Rating - The report indicates a generally positive outlook for the global transport markets, particularly in ocean freight, while air freight shows signs of weakness [1][2]. Core Insights - Global ocean volumes in Q2 are up 6% year-over-year (yoy) in China, with Asia-Europe trade also experiencing mid-single-digit growth, despite some declines in Pacific volumes [1][2]. - Air freight has weakened recently, with initial growth in April fading due to regulatory changes and underperformance in North America [1][3]. - The China-US cargo rush is slowing, with forecasts indicating significant declines in US imports and weaker export orders from China [2][4]. Summary by Sections Freight: Ocean Resilient, Air Softer - Ocean freight volumes are showing resilience with a 6% increase in China port throughput yoy, while air freight has softened following regulatory changes [1][2]. Air Freight: Softer Following De Minimis Changes - Air freight growth was initially positive in April but has since declined, particularly in North America, with ISM new orders in contraction for four consecutive months [1][2][3]. Sea: Positive Global Volume Growth in Q2 - Global container volumes increased by 6% in April, indicating a positive trend in seaborne trade despite some regional variations [1][2][35]. Shipping: Rates Up from April Lows, but Starting to Fade on the Pacific - Shipping rates have recovered from April lows but are beginning to show signs of fading momentum, particularly in the Pacific region [1][2][95]. Airlines: Weaker Unit Revenue Trends into Summer - Airline fare data has weakened, particularly in Europe and the US, with expectations of slowing passenger growth across major hubs [3][4]. Airports: Generally Slowing Traffic Growth - Airport traffic growth is generally slowing, reflecting broader trends in air travel demand [3][4]. Commodities Shipping - Crude tanker rates have increased due to geopolitical tensions, while demand for shipments remains high [9]. Asia-Europe Trade - There is robust growth in Asia-Europe container trade, supported by favorable exchange rates for imports from China [9][67][69].