Investment Rating - The report maintains a Neutral rating across equity regions to maximize diversification, with an Overweight (OW) stance on bonds and an Underweight (UW) on credit [3][6]. Core Insights - The report highlights a cross-asset repricing of growth and inflation due to rising tariff risks, leading to a more defensive investment stance [1][7]. - US equity strategists have reduced their S&P 500 return forecasts to -5% for 3 months and +6% for 12 months, while European strategists have adjusted their forecasts to -6% for 3 months and +5% for 12 months [3][19]. - The average US tariff rate is expected to rise by 5 percentage points to 15%, with GDP growth revised down to 1% from 1.5% [1][2]. Summary by Sections Economic Outlook - The report indicates a mixed economic outlook with US manufacturing PMI falling to 49.8, and inflation expectations rising, leading to a revised recession probability of 35% [1][2]. - European economists have also cut growth forecasts and raised inflation expectations, anticipating an ECB cut in July [1]. Asset Allocation - The report suggests a shift to more defensive positions, recommending selective hedges due to elevated implied volatility across asset classes [3][6]. - The commodities team has raised their 2025 gold forecast to $3,300 per troy ounce, indicating a shift in diversification strategies towards gold and the Yen [2][19]. Market Performance - The report notes a decline in cross-asset pricing of growth across regions, with credit repricing growth risks more clearly [2][19]. - The Dollar has become more sensitive to the S&P 500, reducing its diversification potential, while gold and Yen have emerged as key diversifiers [2][19].

Investment Ratings - The report includes a "Buy" rating for MediaTek, CR Land, Weichai Power, and Krafton, while removing Advantest, Delta Electronics, Keppel Ltd, and Zijin Mining from the APAC Conviction List [1]. Core Insights - MediaTek is transitioning from a traditional smartphone application processor provider to an AI-focused company, with expected revenue and earnings growth of 16% and 17% CAGR from 2024 to 2027, respectively [2][24]. - CR Land is positioned for recovery in business growth and profitability, with forecasts indicating a re-acceleration in contract sales growth and market share gains [3][41]. - Weichai Power is expected to benefit from an improving outlook for heavy-duty trucks and a more profitable engine portfolio, with a forecasted 18% EPS CAGR over two years [4]. - Krafton's PUBG franchise is anticipated to drive earnings, with a focus on strong performance in upcoming results [5][9]. Summary by Company MediaTek - Positioned to transition to AI applications, with a forecasted revenue growth of 16% CAGR from 2024 to 2027, driven by market share gains and new total addressable markets (TAMs) [2][24][25]. - Expected operating margin (OpM) improvement from 19% in 2025 to 22% in 2027 [25]. - Current trading at 16x/13x FY26/27E P/E, at the mid/low-end of its historical range [26]. CR Land - Forecasts indicate contract sales growth re-acceleration and market share gains, with a projected gross profit margin recovery to 18% by 2027 [3][41]. - Expected average free cash flow (FCF) yield of 11% during 2025-2027 [3]. - Current share price implies a compelling valuation at 0.4x P/B on its development property business [3]. Weichai Power - Anticipated re-rating due to improved cyclical outlook for heavy-duty trucks and a more profitable engine portfolio [4]. - Forecasted gradual increase in dividend payout supported by strong net cash position and FCF generation [4]. - Currently trades at 10x 2025E P/E with a 6% dividend yield [4]. Krafton - Focus on the strong momentum of the PUBG franchise as a key earnings driver [5][9]. - Expected to outperform consensus estimates in upcoming earnings release [9]. - Currently trading at near-historical trough level at 12x 2025E P/E [9].

Investment Rating - The report indicates a short-term upside risk for oil prices while medium-term risks are skewed to the downside [1][3]. Core Insights - Brent prices have increased to the mid-70s per barrel due to solid spot demand and short-term supply risks from sanctions, outweighing US growth concerns [1]. - President Trump's potential imposition of secondary tariffs on Russian and Iranian oil could impact market dynamics, although the effectiveness of such measures remains uncertain [2]. - US economists have lowered the 2025 GDP growth forecast by 0.5 percentage points to 1%, raising the 12-month recession probability to 35%, which could affect global oil demand [3]. Supply and Demand Summary - Trackable net supply and demand remained flat week-over-week, with OECD commercial stocks decreasing by 2 million barrels to 2,747 million barrels [4][13]. - US Lower 48 crude production nowcast edged down by 0.1 million barrels per day to 11.3 million barrels per day, while Canada liquids production increased by 0.2 million barrels per day to 6.3 million barrels per day [13][15][18]. - Global visible stocks decreased by 5 million barrels week-over-week, indicating a tightening supply situation [4][13]. Price Dynamics - The Brent 1M/36M timespread is currently $2 per barrel below its inventory-implied fair value, suggesting potential price adjustments [4][12]. - The average crude basis has rallied by 1.2 percentage points week-over-week, indicating stronger physical demand relative to futures prices [12][43]. - Brent implied volatility remains low, standing 10 percentage points below its fair value, reflecting a stable market environment [12][49]. Geopolitical and Market Trends - Despite weak consumer sentiment, US gasoline demand remains resilient, with significant crude volumes exported from Russia primarily to India and China [8][12]. - Northwest-Europe net refining margins are above seasonal averages, boosted by strong US refining outages [12][46]. - The report highlights ongoing imperfect compliance with OPEC+ production cuts, which could influence future supply dynamics [22].

Investment Rating - The report assigns a "Buy" rating to Hesai Group, a leading LiDAR solutions provider, indicating a positive outlook for the company's stock performance [9]. Core Insights - The ADAS LiDAR industry is expected to experience high growth, driven by the acceleration of autopilot technology in the domestic market and the increasing recognition of LiDAR as a key sensor by OEMs [1][7]. - There is an anticipated stable gross margin for ADAS LiDAR products, supported by the introduction of affordable options and growing demand for ultra-high performance LiDARs as the industry moves towards L3/L4 levels [2][8]. - OEMs are likely to partner with multiple LiDAR suppliers to minimize supply chain risks, leading to a relatively stable competitive landscape dominated by top LiDAR suppliers [2][10]. Summary by Sections Industry Growth - The ADAS LiDAR industry is projected to grow significantly, with RoboSense reporting a 110% year-over-year increase in total LiDAR shipments, reaching 544k units in 2024 [1]. - Leading OEMs are targeting L3 capabilities by the end of 2025, which will increase the content value per vehicle [1][7]. Market Dynamics - The report highlights that the introduction of a US$200 priced product has made LiDAR more accessible, contributing to stable gross margins [2]. - The demand for ultra-high performance LiDARs is expected to rise as OEMs prepare for L3/L4 stages, which will also support margin stability [2][8]. Competitive Landscape - The trend of OEMs partnering with multiple LiDAR suppliers is emphasized, particularly for those with large volumes, to mitigate supply chain risks [2][10]. - The management anticipates a stable competition landscape where leading LiDAR suppliers will maintain their market dominance [2][10]. Investment Thesis - Hesai is well-positioned to benefit from the acceleration of the NEV market's navigation on autopilot (NOA) adoption starting in 2025, alongside the launch of lower-cost products [9]. - The company is entering a growth phase with its next-generation ATX product, which is expected to drive revenue growth and strong profit CAGR [9].

Investment Rating - The report assigns a "Buy" rating to Bank of China (BOC), Postal Savings Bank of China (PSBC), and China Construction Bank (CCB) with target prices of Rmb 6.73/HK$ 5.00, Rmb 6.82/HK$ 5.59, and Rmb 11.14/HK$ 7.91 respectively [24][27][28] Core Insights - Four large state-owned banks in China announced a total capital raise of Rmb 520 billion, with Rmb 500 billion from the Ministry of Finance and Rmb 20 billion from other state-owned shareholders [1] - The capital injection will increase the average shareholding of the Ministry of Finance and Central Huijin Investment by 5 percentage points to 56% [1] - The capital replenishment is expected to be completed through A-share private placements by the end of 2025 [1] Summary by Sections Capital Raise Details - The capital raise will be evenly distributed among BOC and PSBC, with each bank raising approximately Rmb 120 billion [3] - The new shares will be issued at a price below 1x book value, representing a 16% premium over recent trading prices [3] - New shares as a percentage of outstanding shares post-recapitalization for BOC and PSBC will be 8% and 17% respectively [4] Capital Adequacy - The CET1 ratio for BOC and PSBC is projected to increase by 86 basis points and 151 basis points respectively [4] - The report indicates that to maintain dividend per share (DPS) at 2024 levels, dividend payout ratios would need to rise to 31-36% [5] Growth Projections - The announced capital raise, along with increased dividend payouts, would allow for a 7.9-9.3% growth in risk-weighted assets (RWA) assuming unchanged density [5] - The report anticipates a downward trend in RWA density, which would enable more asset growth without proportionally higher capital consumption [15] Comparative Analysis - The report notes that Agricultural Bank of China (ABC) and Industrial and Commercial Bank of China (ICBC) were excluded from the announced capital injections, with estimates suggesting they may require Rmb 150 billion each for capital support [18][19] - The average CET1 ratio increase for participating banks is expected to be 1.03 percentage points [21]

Investment Rating - The report maintains a "Buy" rating for several companies including Tencent, Xiaomi, PDD, JD, NetEase, YMM, TAL, TCOM, BYD, AMEC, Concordia, GDS, and Kuaishou [1][5][8][9][10][12]. Core Insights - The report emphasizes a shift in focus from AI infrastructure to AI applications, highlighting key stock ideas around the secular AI theme [1]. - It identifies five overarching themes and stock preferences, advocating a dual-pronged approach focusing on domestic policy beneficiaries and defensive games with solid global footprints [1]. - The report outlines expected sales volume growth for BYD, projecting 5.5 million units in 2025, a 29% year-over-year increase, with a stable market share of 35% in China's NEV sales [5]. - The report anticipates a recovery in Japan's tech sector around July-September, driven by a cyclical upturn and AI impact, with key stock recommendations including Murata Mfg, TDK, and Renesas [5]. - In the India QSR sector, the report expects a recovery in demand trends in the first half of FY26, with Domino's projected to outperform with 10% year-over-year LFL sales growth [5]. - AMEC is highlighted for its new product developments and increased R&D spending, with a positive outlook for growth [5]. Summary by Relevant Sections China Internet - The report discusses key investor focuses and debates following the China Internet results season, emphasizing stock ideas related to AI applications [1]. Japan Tech - The report notes early signs of recovery in Japan's tech sector, with a focus on production increases in edge AI devices expected around July-September [5]. BYD - BYD is projected to achieve a sales volume of 5.5 million units in 2025, with improvements in gross and net margins due to cost reduction efforts [5]. India QSR - The report anticipates a sluggish demand trend in Q4 FY25 but expects a recovery in the first half of FY26, with specific growth projections for Domino's and other QSR players [5]. AMEC - AMEC's recent product announcements and R&D advancements are expected to drive solid growth, with a target price set at Rmb275 [5]. Concordia Financial - Concordia Financial aims for a 9% ROE by FY3/28, reflecting a significant increase in net profits [9]. GDS Holdings - GDS's public REIT offering has been approved, with a projected distribution yield of 5.5% for 2025 [9]. Kuaishou - Kuaishou's advertising strategy focuses on content consumption ads and AI benefits, with confidence in achieving solid targets for 2025 despite a slowdown in Q1 [9].

Investment Rating - The report provides a mixed investment rating for various developers, with specific recommendations such as "Sell" for China Vanke and "Buy" for COLI and CR Land [61][62]. Core Insights - The primary market in monitored cities showed a 28% week-on-week increase in new home sales volume, while secondary transactions increased by 5% week-on-week [7][39]. - The easing policies implemented in cities like Shenzhen and Anhui are aimed at promoting new home sales and destocking existing inventory, with a focus on affordable housing projects [1][2]. - The report indicates that the overall primary gross floor area (GFA) sold in 1Q25 was flattish year-on-year, slightly below the expected 2% growth [10]. Summary by Sections Local Policy Developments - Shenzhen updated its Urban Village Redevelopment Project (UVRP) execution guidelines, including housing vouchers and stricter controls on new project approvals [1]. - Anhui introduced easing policies to promote new home sales and expand the scope of local projects [2]. Market Performance - In the 26th week of the easing cycle, primary and secondary volumes were up 21% and 5% week-on-week, respectively, significantly above pre-easing levels [3][11]. - The new home searching heat index fell by 2% week-on-week, indicating a decrease in demand compared to pre-easing levels [20]. Sales and Transactions - New home sales volume averaged a 28% increase week-on-week, with tier-3 cities and the Yangtze River Delta (YRD) outperforming [7][29]. - Secondary transactions showed a 5% week-on-week increase and a 14% year-on-year increase, reflecting positive price expectations from agents and homeowners [39][41]. Inventory and Completions - Inventory levels decreased by 0.3% week-on-week, with inventory months at 25.9, slightly above the average of 25.5 in February 2025 [49][51]. - Completions are expected to show a teen-level year-on-year decline in March 2025, with a projected 3% year-on-year increase for FY25 [54][58]. Valuations - The report notes that offshore developers are trading at an average 34% discount to end-2025 estimated net asset value (NAV), while onshore developers are at a 22% discount [63].

Investment Rating - The report indicates a downward revision in the 2025 Global Real GDP Growth Forecast, now standing below consensus due to tariff-driven downgrades in the US and Euro Area [2][7]. Core Insights - The Global Financial Conditions Index (FCI) has tightened primarily due to short rates and equities, impacting growth forecasts negatively [6][22]. - The report highlights a significant decrease in growth forecasts across various regions, particularly in North America and Western Europe, with specific countries like Turkey showing an increase in growth projections [8][92]. - The Current Activity Indicator (CAI) for March shows a mixed performance, with the UK experiencing a decline while emerging markets like India and China show stronger growth [10][47]. Summary by Sections Economic Indicators - The report provides an update on global economic indicators, emphasizing the impact of higher tariffs on growth [1]. - The 2025 GDP forecast has been downgraded for the US and Euro Area, reflecting a broader trend of reduced growth expectations [2][7]. Financial Conditions - The Global ex Russia FCI has tightened, primarily influenced by short-term interest rates and equity market performance [6][22]. - The report details the contributions to the FCI changes, indicating a tightening trend across various financial metrics [23][26]. Growth Forecasts - The report outlines changes in GDP forecasts for 2025, with notable adjustments across multiple regions, particularly highlighting Turkey's positive revision [8][92]. - The CAI for March indicates a global average of +2.2%, with developed markets at +0.8% and emerging markets showing stronger performance [10][47]. Inflation Insights - The report discusses changes in inflation forecasts for 2025, with core inflation in Turkey projected to increase by 1.9 percentage points [88]. - Headline inflation in Russia is expected to rise by 2.8 percentage points, indicating significant regional variations in inflation expectations [88].

Investment Rating - The report rates Weichai Power as a "Buy" and Sinotruk as a "Sell" based on their respective market positions and earnings outlooks [8][24]. Core Insights - The China heavy-duty truck (HDT) industry is expected to enter a multi-year upcycle driven by normalization in replacement demand, with domestic demand forecasts raised by 14-26% for 2025E-2030E, anticipating a volume doubling by 2030E compared to 2024 [1][15]. - The penetration rates for LNG HDTs and electric HDTs (eHDTs) are projected to increase to 36% and 35% respectively by 2030E, with clean/new energy HDTs expected to account for over 70% of total HDT demand by 2030E [1][15]. Summary by Sections Industry Outlook - The report raises the outlook for the heavy-duty truck industry in China, indicating a positive cycle inflection into 2025E, supported by a rebalanced truck fleet size against current activity levels [17]. - The expected peak in sales volume is projected at 1.2 million units by 2030E, compared to 1.55 million units at the previous cycle peak in 2020 [15]. Demand and Supply Dynamics - The report highlights that emission policies will play a crucial role in shaping the demand trajectory, with potential upgrades to emission standards and the phase-out of high-polluting trucks expected to drive demand [2]. - The domestic HDT sales volume is anticipated to see a mean reversion, gradually moving back to normalized replacement demand levels [9]. Company-Specific Insights - Weichai Power is favored due to its improving earnings power cycle-over-cycle, while Sinotruk faces margin pressure from a slowdown in high-margin export business and the impact of truck electrification [8][20]. - Revised EPS estimates for Sinotruk for 2025E-27E are 15-25% below consensus estimates, while Weichai's estimates are 6-18% above consensus, reflecting a more favorable outlook for Weichai [20][23]. Financial Projections - The report introduces new revenue and net profit estimates for both companies, with Weichai's target price raised to HK$22.00/RMB24.00 from HK$14.61/RMB16.30, while Sinotruk's target price is adjusted to HK$18.60 from HK$17.30 [21][24]. - The report anticipates a significant increase in domestic sales volume, with projections indicating a recovery in sales momentum driven by favorable replacement policies [25][66].

GS China Economic Outlook Leaning Against the Wind (逆风前行) March 2025 Note: Forecast numbers reflect data available as of 21 March. Source: Bloomberg, Goldman Sachs Global Investment Research. Global Investment Research 2 Key China Macro Views Hui Shan Chief China Economist Goldman Sachs (Asia) L.L.C. +852-2978-6634 Hui.Shan@gs.com Lisheng Wang China Economist Goldman Sachs (Asia) L.L.C. +852-3966-4004 Lisheng.Wang@gs.com Xinquan Chen China Economist Goldman Sachs (Asia) L.L.C. +852-2978-2418 Xinquan.Chen@gs ...