Investment Rating - The report revises down the full-year 2025/26 forecast of headline PPI inflation to -2.4%/-0.7% yoy from -2.1%/-0.6% yoy previously, indicating a bearish outlook on the industry [10]. Core Insights - China's headline CPI inflation remained unchanged at -0.1% yoy in May, with a decline in goods prices offset by higher services prices [1][3]. - Headline PPI inflation fell to -3.3% yoy in May, down from -2.7% yoy in April, primarily due to falling commodity prices [1][9]. - The report indicates that the weak PPI data suggests more deflationary pressures on China's PPI inflation for 2025 and 2026 than previously anticipated [10]. Summary by Sections CPI Analysis - In May, the CPI was -0.1% yoy, with a month-on-month increase of +0.5% (annualized, seasonally adjusted) [2][3]. - Food inflation decreased to -0.4% yoy in May, primarily due to lower prices of fresh vegetables, while pork prices rose by 3.1% yoy [4]. - Non-food CPI inflation was flat at 0% yoy, with fuel costs falling by 12.9% yoy [5][7]. PPI Analysis - Year-over-year PPI inflation fell to -3.3% yoy in May, with deeper deflation mainly from price declines in upstream sectors like energy and metals [9]. - Month-over-month PPI inflation declined to -5.1% (annualized, seasonally adjusted) in May [9]. - PPI inflation in producer goods fell to -4.0% yoy in May, while consumer goods edged up to -1.4% yoy [9]. Forecast Revisions - The report incorporates weak PPI data, leading to a downward revision of the full-year 2025/26 forecast of headline PPI inflation to -2.4%/-0.7% yoy [10].

Investment Rating - The report maintains a neutral stance on asset allocation, advocating for diversification, particularly in international equities and bonds [8]. Core Insights - The report highlights a renewed focus on the demand for US assets from foreign investors, with potential risks from incremental tax and policy changes affecting their appetite [3]. - US equity markets have shown limited reaction to recent economic data, with high dividend yield stocks slightly underperforming compared to the broader market [4]. - The report notes that US mega-cap stocks have been the primary drivers of the recent recovery in US equities, while the S&P 500 equal weight index remains flat against global counterparts [8]. Economic Indicators - Recent economic data indicates that both US Manufacturing and Services ISM came in below consensus, while non-farm payroll growth slightly exceeded expectations, suggesting a slowdown in US growth [1]. - The European Central Bank (ECB) has lowered its deposit rate by 25 basis points and downgraded its inflation projection for 2026 to 1.6% [1]. Yield Curves and Interest Rates - Yield curves have flattened across regions, with US bonds experiencing a sell-off following the non-farm payroll report, driven by higher front-end and real rates [2]. - The report anticipates that the last rate cut by the ECB will occur in September, with expectations of further rate cuts from the Swiss National Bank [2]. Currency and Foreign Exchange - The report's foreign exchange strategists have adjusted their EUR/USD forecasts to 1.17, 1.20, and 1.25 for 3, 6, and 12 months respectively, reflecting concerns over US fiscal sustainability [3]. - The correlation between the US dollar and other assets has reverted to more normal levels, although the gap between the dollar and rates differentials remains wide [3]. Earnings Impact - The report estimates a potential impact of 5% on STOXX 600 earnings by year four, although companies may have offsetting options such as re-listing in the US [4]. Asset Allocation Recommendations - The report suggests an overweight position in US government bonds, while maintaining a neutral stance on equities and advocating for international diversification [22].

市场洞察 - Marquee 市场洞察|市场|股票 股票——上涨尾部 旋⻛般的⼏个⽉ 从本届政府迄今为⽌的⾏动中可以清楚地看出，其⽬标并⾮推翻这艘巨轮，⽽是将其引向有利于 美国经济⻓远利益的⽅向，同时推动盟友和伙伴承担各⾃的责任，即分担责任，在解决全球安 全、稳定和⼈道主义援助等问题上发挥更⼤作⽤。这是为了减轻美国不成⽐例的负担，同时仍然 保持其在从军事到科技等多个领域的全球主导影响⼒。我知道——实现这⼀⽬标说起来容易做起 来难，但我们应该以开放的⼼态来审视和评估。 对于市场⽽⾔，我们知道政策的⾛向。我们已经从负⾯情绪和超卖的深渊中反弹。虽然经济显⽰ 出⼀些疲软迹象，但总体表现良好。仓位和情绪指标保持平衡，因此仍有重新冒险的空间。短期 内若没有重⼤冲击，⻛险倾向于股市进⼀步上涨。 标准普尔5⽉创下1990年以来最佳表现，跑赢新兴市场股票。"五⽉抛售，离场"的呼声就此终结 吧 资料来源：GIR。Glissman。2025年6⽉2⽇。过往业绩不代表未来业绩。 周期性股票与防御性股票的表现反映了美国实际GDP约2%的增⻓环境。⾼盛经济学家预计，未来 四个季度实际GDP增⻓率将达到约1%。 这⾥有两种可能的解释：1/ ...

Investment Rating - The report indicates a positive outlook for the Euro, revising the forecast higher to 1.25 in 12 months from 1.20, suggesting a buy recommendation for a 6-month EUR/USD digital call option at 1.25 with a risk-reward ratio of 1.35 for approximately 7.3% [2][10][12]. Core Insights - The US Dollar has experienced a decline of about 6% this year, reversing its previous gains, and the report suggests that this depreciation trend is likely to continue due to slowing economic performance and skepticism regarding foreign investment in US assets [10][13][26]. - The report highlights the potential end of the easing cycle for the Reserve Bank of India (RBI), indicating that after a series of rate cuts, the RBI has signaled limited space for further monetary support, with inflation forecasts adjusted accordingly [5][37]. - The report discusses the implications of fiscal risks on the Dollar, noting that while higher yields have been accepted as compensation for holding US debt, concerns about fiscal sustainability may lead to a weaker Dollar and higher yields in the future [20][26]. Summary by Sections Euro Forecast - The forecast for EUR/USD has been adjusted to 1.17, 1.20, and 1.25 over the next 3, 6, and 12 months respectively, reflecting a more bullish outlook [12][13]. - A digital call option for EUR/USD at 1.25 is recommended, with a maximum payout of 13.7 times the premium paid [14]. US Dollar Analysis - The report notes that the broad Dollar has fallen approximately 6% this year, with a stable performance against other developed market currencies over the past six weeks [10][13]. - The report suggests that the current adjustment in the Dollar's value is more indicative of a transitional phase rather than a definitive end to its depreciation [10][13]. RBI and Indian Market Insights - The RBI has cut policy rates by 100 basis points in the current cycle, indicating a likely end to the easing cycle, with inflation expected to rise to around 4.5% by mid-2026 [5][37]. - The report emphasizes the importance of liquidity and credit growth, noting that the RBI may maintain rates unless there is a significant slowdown in growth [37][38]. Singapore Dollar Strategy - The report recommends shorting the Singapore Dollar nominal effective exchange rate (SGDNEER) via options, given the low likelihood of the Monetary Authority of Singapore widening the trading band [28][32]. - The strategy is based on the expectation of a major USD rebound and the current large front-end rate differential between USD and SGD [32][33].

Investment Rating - The report maintains a "Buy" rating for Volvo CE, indicating confidence in its growth potential within the machinery sector [27]. Core Insights - Domestic demand for trucks is accelerating, while construction machinery demand is moderating due to factors such as replacement policies and seasonal effects [2][3]. - The growth for construction machinery may have peaked in Q1 2025, with a notable slowdown observed in recent months [3][6]. - Sany expects a 20% year-on-year growth in domestic demand for excavators for the full year, despite a challenging competitive landscape [10][12]. - The electrification of machinery is gaining traction, with significant implications for exports, particularly to Europe [14][16]. Summary by Sections Domestic Demand - There is a divergence in domestic demand, with trucks experiencing growth while construction machinery sales are moderating due to replacement policies and seasonal factors [2][3]. - Sany reported a moderation in machine fleet operating rates and utilization hours, indicating a slowdown in demand [6]. Exports - Demand for exports is stronger in Southeast Asia and Africa, while the CIS region shows weakness [9]. - Sany's excavator export volume increased by 16% year-on-year in the first five months of 2025, with a focus on Asia and Africa [12][13]. Technology and Electrification - The focus on electrification is rising, with Chinese OEMs aiming to penetrate European markets, which are more challenging under traditional internal combustion engine (ICE) standards [14][16]. - Weichai and Sinotruk anticipate a ceiling for electrification penetration in heavy-duty trucks at 25-30% due to infrastructure constraints [16]. Competitive Landscape - Pricing pressure has resurfaced in the industry, particularly for large-sized machines and electrified heavy-duty trucks (eHDTs) [17][18]. - The emergence of a "shared excavators" business model is noted, contributing to monthly sales volume but not considered real demand [20].

Investment Rating - Maintain Buy on Chenbro, Auras, and E Ink [2] Core Insights - Chenbro's May revenues declined by 7% MoM to NT$1.8 billion, primarily due to FX impact and a high base, but new rack products are expected to support growth in 3Q25 [4][10] - Auras experienced a 20% MoM revenue decline in May due to FX impact and diversification of production sites, but is expected to see growth from liquid cooling adoption and AI server expansion [23][26] - E Ink's April revenues exceeded expectations, with a 50% YoY increase, driven by rising demand for e-readers and e-labels, although FX impacts may affect future growth [42][43] Summary by Company Chenbro - May revenues were NT$1.8 billion, 12% below estimates, with expectations for June revenues to remain stable [4][10] - 3Q25 revenues are anticipated to be supported by new noise-cancellation rack products and increasing market share in ASIC AI servers [4][10] - Earnings revisions reflect a 3% reduction in net income estimates for 2025-27E due to lower revenues and higher operating expenses [11][14] Auras - May revenues fell to NT$1.62 billion, with expectations for June revenues to remain at similar levels [29][30] - The company is projected to see a 19% QoQ revenue growth in 2Q25, driven by liquid cooling components and AI server expansion [23][26] - Earnings revisions indicate a slight increase in revenue estimates for 2025-27E, with a target price raised to NT$825 based on a P/E multiple of 19.9x [41][30] E Ink - April revenues were NT$3.31 billion, 14% above estimates, with a 50% YoY growth attributed to increased demand for e-readers and e-labels [42][43] - Future revenues are expected to be stable, with a projected 15% QoQ growth in 2Q25 [47] - Earnings revisions show a reduction in net income estimates for 2025-27E by 19% due to lower revenue expectations and higher operating expenses [49][51]

Investment Rating - The report indicates a positive outlook for the China FX and rates markets, with a bias towards CNY appreciation against the USD following trade de-escalation [4][5]. Core Insights - The report highlights a revised 2025 real GDP growth forecast of 4.6% year-on-year, up from 4.0%, driven by stronger-than-expected real export growth [4]. - The USD/CNY forecasts have been adjusted to 7.20/7.10/7.00 over a 3/6/12-month horizon, reflecting a more favorable outlook for the CNY [4]. - The report notes a bear steepener in the yield curve following a 10bp rate cut by the PBOC, with improved growth prospects leading to rising long-end rates [5]. Valuations and Policy Stance - The USD/CNY spot fell below 7.2 in May, indicating a strengthening bias for the CNY [9]. - The report discusses the narrowing of the countercyclical factor to near zero, suggesting a more stable CNY fixing mechanism [10][11]. Technicals - The carry-to-volatility ratio for USD/CNH and EUR/CNH remained largely unchanged in May, indicating stable market conditions [21]. - Short-term momentum to buy EUR and sell CNH fell notably in May, reflecting changing investor sentiment [22]. Fundamentals - China's trade balance fell in April due to a lower goods trade surplus, highlighting potential vulnerabilities in the economy [34]. - Travel exports in March 2025 were around 151% of 2019 levels, while travel imports rose to approximately 98% of 2019 levels, indicating a recovery in the services sector [36]. Rates - Long-term cash bond yields and NDIRS rates rose in May after a 10bp policy rate cut, reflecting market adjustments to monetary policy [41]. - Front-end rates moved sideways following the rate cut, indicating a stabilization in short-term interest rates [42]. Liquidity and Leverage - The PBOC injected liquidity into the interbank market in May primarily through a 50bp RRR cut, enhancing market liquidity [61]. - Financial leveraging in the bond market rose further in May as interbank repo rates fell, indicating increased market activity [63]. Bond Supply and Demand - Net issuance of central government bonds was around RMB 940 billion in May 2025, reflecting an acceleration in bond issuance [69]. - The average CGB auction size increased further in May, signaling a robust demand for government bonds [75].

Investment Rating - Maintain Buy on Chenbro, Auras, and E Ink [2] Core Insights - Chenbro's May revenues declined by 7% MoM to NT$1.8 billion, primarily due to FX impact and a high base, but new rack products are expected to support growth in 3Q25 [5][10] - Auras experienced a 20% MoM revenue decline in May due to FX impact and diversification of production sites, but is expected to benefit from rising liquid cooling adoption and expansion into ASIC AI servers [21][23] - E Ink's April revenues exceeded expectations, with a 50% YoY increase, driven by strong demand for e-readers and e-labels, although FX impact may affect future growth [38][39] Chenbro Summary - May revenues were NT$1.8 billion, 12% below estimates, with expectations for June revenues to remain stable [5][10] - 3Q25 revenues are anticipated to be supported by new noise-cancellation rack products and increased market share in ASIC AI servers [5][10] - Earnings revisions reflect a 3% reduction in net income estimates for 2025-27E due to lower revenues and higher operating expenses [11][12] Auras Summary - May revenues fell to NT$1.62 billion, with expectations for June revenues to remain at similar levels [21][26] - The company is projected to see a 19% QoQ revenue growth in 2Q25, driven by liquid cooling components and AI server expansion [21][23] - Earnings revisions indicate a slight increase in revenue estimates for 2025-27E, reflecting higher growth expectations in liquid cooling [27][28] E Ink Summary - April revenues were NT$3.31 billion, 14% above estimates, with a strong YoY growth of 50% [39][42] - The company expects revenues to stabilize in May and June, with 2Q25 revenues projected at NT$9.26 billion [42] - Earnings revisions show a reduction in net income estimates for 2025-27E due to macro uncertainties, but a positive outlook on e-paper adoption remains [44][45]

Investment Rating - The report assigns a "Buy" rating to Innovent Biologics with a revised 12-month price target of HK$74.95, reflecting an upside potential of 15.2% from the current price of HK$65.05 [15][9]. Core Insights - Innovent Biologics has shown encouraging survival benefits for its drug IBI363 in various cancer indications, particularly in IO-treated squamous and adeno NSCLC, with improved overall response rate (ORR) and progression-free survival (PFS) data compared to previous reports [1][2][12]. - The risk-adjusted sales forecast for IBI363 has been raised to US$3.2 billion by 2035, up from US$1.4 billion, due to the addition of 2L adeno NSCLC and an increase in the probability of success (POS) for other indications [1][9]. - The report highlights the importance of randomized controlled trials (RCT) to further validate the long-term benefits of IBI363, especially in the context of its mechanism of action that enhances the immune environment [7][12]. Summary by Sections Clinical Data - The updated phase 1 data for IBI363 indicates a median PFS of 9.3 months for the high-dose cohort, an increase from 7.3 months previously reported, and a median overall survival (mOS) of 15.3 months, suggesting a strong conversion from PFS to OS [2][7]. - In adeno NSCLC, the median PFS was shorter at 5.6 months, but the overall survival data remains competitive, indicating potential lasting benefits post-disease progression [3][7]. Market Position and Valuation - Innovent Biologics is positioned as a leading biopharma company in China with a robust pipeline of over 30 assets, including the leading PD-1 inhibitor sintilimab [12]. - The report emphasizes that Innovent is undervalued at current levels, with a high market-implied weighted average cost of capital (WACC) that does not fully reflect its strong revenue potential and pipeline [12]. Future Outlook - The ongoing phase 1b/2 trial for IBI363 in combination with chemotherapy in the first-line setting is expected to generate further discussions regarding its competitive safety profile and efficacy [8][12]. - The report anticipates that the company will maintain its leading position in the biotech sector in China, supported by strong commercialization capabilities and collaborations with global partners [12].

Investment Rating - The report maintains a positive outlook on cement, copper, and incrementally positive on steel and aluminium, while holding a negative view on coal and lithium [1][9]. Core Insights - Earnings estimates for China commodities have been refreshed, reflecting mark-to-market price changes for 1H25, with target price changes ranging from -13% to +12% [1][9]. - The report highlights a positive outlook for hog pricing/margin in 2H25E due to improved supply discipline [1][9]. Summary by Sector Steel - Earnings forecasts for Baosteel and Angang have been revised up by 1-4% for 2025E, while the loss-making forecast for Maanshan has been cut by 11% [10]. - Maintain Buy on Baosteel with a new target price of Rmb8.8/sh [10]. Coal - The thermal coal market is expected to remain balanced in 2025E, with a decline in demand driven by renewable energy expansion [11]. - Earnings forecasts for Shenhua, Chinacoal, and Yankuang have been cut by 2-11% for 2025E and 10-27% for 2026-27E [12]. Cement - Unit gross profit forecasts for cement have been revised down by Rmb2-6/t for 2025E, but a positive view is maintained for 2H25E due to supply discipline [13]. - Earnings estimates for CNBM, WCC, BBMG-H/A, Conch-H/A, and CRBMT have been cut by 6% to 18% for 2025E [14]. Aluminum - Earnings estimates for Hongqiao have been revised up by 5-27% for 2025-27E, reflecting higher industry spread forecasts [17]. - Maintain Neutral on Hongqiao with a target price of HK$12.5/sh [17]. Copper - The benchmark copper price forecast has been revised to an average of US$4.20/lb in 2025E and US$4.61/lb in 2026E [18]. - Earnings estimates for CMOC-H/A, JXC-H/A, and MMG have been cut by 1-18% for 2025-26E [18]. Lithium - Earnings estimates for Ganfeng, Tianqi, and Yongxing have been cut by 3-4% for 2025E due to lower lithium prices [20]. - Yongxing's 2027E earnings have been cut by 37% based on flat lithium price forecasts [20]. Paper - Earnings forecasts for ND Paper have been revised up by 3-4%, while Sunpaper's earnings have been cut by 3% [22].