Investment Rating - The report does not explicitly provide an investment rating for the industry discussed [1]. Core Insights - The report highlights a significant pullback in new export orders in countries affected by tariffs, particularly Canada and Mexico, with a historical correlation indicating that a 1-point decline in the S&P new manufacturing export orders PMI component predicts a 0.75 percentage point hit to year-on-year export growth [2]. - The April flash PMIs indicate mixed trends in developed markets (DM), with the DM composite flash PMI falling by 1.1 points to 50.7, driven by a decline in the services component [2]. - The report notes that the Euro area composite flash PMI declined to 50.1 in April, slightly below consensus expectations, with services leading the decline [4]. Summary by Sections Global Trade Data - The report compiles a data calendar for upcoming global business surveys and trade data releases, emphasizing the importance of country-specific export data as indicators of how tariffs are reshaping global trade [2]. - Early releases of trade data have shown a correlation with US trade flows, with expectations of a pullback due to tariff implementation [2]. US Economics - The report indicates a growth slowdown, with a lowered Q1 GDP tracking estimate by 0.6 percentage points to -0.2%, influenced by mixed signals from housing and durable goods orders [3]. - It discusses the potential impact of Canadian elections on GDP growth, with increased spending under a Liberal government expected to raise GDP levels by 0.6-0.7% over the next four years [3]. European Economics - The report notes that long-term inflation expectations in the University of Michigan survey remained at 4.4%, with consumer sentiment significantly below earlier levels [4]. - The European Central Bank (ECB) delivered a 25 basis point cut and signaled concerns about growth, with expectations for further cuts in the coming months [4]. Asia/EM Economics - The report assesses the disinflationary impact of tariff-induced global supply reallocation, estimating a potential downside of 1.5% to the price level of core goods [5]. - It highlights the expected impact of US tariffs on Chinese exports and anticipates a focus on easing measures from Chinese leadership in response to economic pressures [5]. GDP Forecast Tracker - The report provides GDP growth forecasts for various regions, with the US expected to grow at 1.2% in 2025, while the Euro area is projected at 0.7% [6]. - China’s growth is forecasted at 4.0% for 2025, reflecting a slowdown compared to previous years [6].

Investment Rating - The report does not explicitly provide an investment rating for the sectors discussed Core Insights - The report highlights the impact of increased US tariffs on various sectors including appliances, autos, industrial tech, and solar companies, with management expressing concerns over supply chain disruptions and capital allocation strategies China Consumer Durables - Companies derive an average of 35% of revenues from China exports and 7% from exports to the US [5] - Production is shifting to overseas factories, with some companies receiving more orders from US clients as they seek to restock before the tariff reprieve period ends [6] - There is low visibility on price re-negotiation, with companies cautious about raising prices due to market share concerns [6] - Ex-US demand remains stable, particularly in Europe, which is expected to absorb US capacity [6] - CAPEX visibility is low, with Mexico considered a safer investment location due to its free trade agreement with the US [6] China Autos - Companies derive 6%-26% of total revenue from China exports and 0%-10% from exports to the US [7] - Management believes US-China trade tensions have softened recently, with expectations of higher exports to Europe due to ongoing negotiations [7] - Auto suppliers report no order cancellations and are negotiating new prices, with some passing on the full tariff burden to customers [8][10] China Industrial Tech - Companies derive 15%-45% of total revenue from exports and 2%-20% from exports to the US [11] - Orders paused initially in early April but returned to normal by the second week, with some customers continuing their overseas construction plans despite tariff uncertainties [11] - Most companies have signed FOB contracts, meaning customers bear the tariff costs [11] - Companies are maintaining existing capacity expansion plans, with some pausing expansion until tariff policies are clearer [12] China Solar - Companies involved in solar exports have 0%-15% direct exports to the US and 35%-55% to other countries [17][18] - One company has stopped shipping ESS products to the US due to high tariffs, while others are expanding inverter capacity overseas [19] - Softening demand in the US is a key challenge, with concerns over potential price hikes dampening downstream demand [20] - Companies are considering scaling back US exposure if operational risks outweigh profitability compared to other regions [20]

Investment Rating - The report indicates a positive sentiment towards the market, with the S&P 500 on track for a 3.9% gain for the week [1] Core Insights - The University of Michigan Consumer sentiment survey shows an increase in sentiment to 52.2 from 50.8, while near-term inflation expectations have decreased to 6.5% from 6.7% [2] - The S&P 500 index is currently 10% below its mid-February high but has risen 13% from its April 7 low, reflecting a constructive market outlook [3] - The potential for the Federal Reserve to counteract any economic slowdown remains, as inflation has not shown significant increases, with March Core CPI inflation reported at only 0.06% month-over-month [3] - Despite recent positive trends, risks to growth, inflation, and corporate earnings persist, with a recession probability estimated at 45% [4] Market Performance - The S&P 500 has shown a weekly change of +4.0%, while the DJIA and NASDAQ have also experienced gains of 2.4% and 6.0% respectively [19] - The report highlights that corporate earnings growth may slow due to the impact of tariffs and a slower growth trajectory for the US economy, with the S&P 500 2025 EPS forecast lowered to $253 [8] Economic Indicators - Key indicators to watch include core retail sales, spending on imports, manufacturing production, jobless claims, and the unemployment rate [13] - The report anticipates continued softness in survey data before hard data begins to weaken around mid-to-late summer [13] Future Outlook - The report suggests that inflation may rise due to high tariffs, with a forecasted acceleration in PCE inflation to around 3.5% year-on-year over the next six months [8] - Upcoming macro and micro data releases are expected to provide further insights into the labor market, inflation, and corporate earnings [17][18]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The heightened US tariffs are expected to significantly impact the Chinese economy and labor market, with a focus on labor market stability as a critical concern for policymakers [2][3] - The report estimates that approximately 16 million jobs are involved in the production of goods exported to the US, with significant vulnerabilities in sectors such as wholesale and retail sales, communication equipment, apparel, and chemical products [2][4][30] - The outlook for US-China tariffs and Chinese exports remains uncertain, with potential for a significant contraction in exports if high tariffs persist [4][38] Summary by Sections Economic Impact - The Trump administration's tariff increases have led to a reduction in the GDP growth forecasts for China, with projections for 2025 and 2026 lowered by 0.5 percentage points to 4.0% and 3.5% respectively [3] - Historical data indicates that during the 2008-09 global financial crisis, a similar decline in exports resulted in substantial employment pressures, particularly among low-skilled migrant workers [2][7] Labor Market Analysis - The report utilizes input-output analysis to quantify the impact of US tariffs on the labor market, highlighting that labor market pressures are expected to increase if exports decline sharply [2][27] - The labor intensity of US-bound goods exports is higher than that of the overall manufacturing sector, indicating that job losses could be significant in affected industries [20][26] Policy Responses - In response to potential unemployment pressures, the Chinese government has indicated plans to enhance unemployment insurance rebates and implement a comprehensive employment stabilization package [3][39] - Historical trends suggest that the People's Bank of China (PBOC) typically cuts policy rates in response to labor market weaknesses, with expectations for monetary easing in the near future [39][40]

Investment Rating - The report indicates a positive investment sentiment towards US Treasuries, with strong inflows observed in this segment [2][4]. Core Insights - Global fund flows showed a net inflow into equities of $9 billion for the week ending April 23, an increase from $8 billion the previous week, driven by reduced outflows from US equity funds [4]. - In fixed income, net outflows were significantly reduced to $0.8 billion from $21 billion in the prior week, with government bond funds continuing to attract inflows [4]. - Emerging markets saw positive flows into mainland China funds, while Taiwan maintained strong net inflows [4]. - Cross-border FX flows turned positive, indicating an improved risk appetite among investors, favoring currencies such as USD, EUR, GBP, and CNY [4]. Summary by Category Equity Flows - Total equity inflows amounted to $68,079 million over four weeks, with a weekly inflow of $9,164 million [10]. - Developed markets saw inflows of $34,063 million, while emerging markets recorded inflows of $27,140 million, with mainland China leading at $24,686 million [10]. - Sector-wise, technology funds experienced the largest inflows of $14,845 million, while financials and healthcare saw significant outflows [10]. Fixed Income Flows - Total fixed income experienced outflows of $32,369 million, with government bonds attracting inflows of $29,366 million [10]. - High yield bonds faced substantial outflows of $23,488 million, while short-duration bonds saw inflows of $29,804 million [10]. FX Flows - Total FX flows recorded a net outflow of $4,751 million, with G10 currencies showing mixed results [12]. - The USD faced outflows of $3,440 million, while the EUR and GBP saw inflows of $2,880 million and $799 million respectively [12]. Fund Positioning - The report highlights a shift in fund positioning, with an increasing share of equity assets in total assets, indicating a growing preference for equities over fixed income [20][27]. - The share of money market fund assets as a percentage of global mutual fund assets has also seen fluctuations, reflecting changing investor sentiment [20].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Global trade volumes have been holding up relatively well in April, with air freight markets re-accelerating after a slowdown [1] - A forecasted 1% year-over-year decline in global container volumes for 2025, primarily driven by declines in the Pacific region [2] - Container rates have remained steady, supported by blanked sailings on the Pacific [3] Summary by Sections Freight: Holding up for now - High-frequency freight data indicates that global trade volumes are stable, with air freight showing signs of recovery [1] Air Freight: April supported by frontloading - Air freight volumes have seen a resurgence due to frontloading, with strong indicators from Europe and Asia [1][2] Sea: April holding up, SE Asia strong - Container volumes increased by 7% year-over-year in March, with Southeast Asia showing robust trade activity [35] Shipping: Blanking supports rates for now - China-outbound container spot rates fell approximately 45% by April 2 but have stabilized since then, aided by carriers blanking sailings [3][92] Travel: Uncertainty on demand outlook - The report highlights uncertainty regarding future demand in the travel sector, although specific data is not provided [6] Airlines - No specific insights provided in the summary regarding airlines [6] Airports: Spain slowing, Zurich and Paris incrementally better - The report notes varying performance across European airports, with some showing improvement while others are slowing [6] Roads: Europe road traffic growing - European road traffic is reported to be growing, indicating a potential increase in logistics activity [6] Commodities Shipping - No specific insights provided in the summary regarding commodities shipping [6] Stable Markets, Supported by Low Capacity Growth - The report suggests that stable markets are being supported by low capacity growth, although specific data is not provided [6]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Local investors express heightened concerns regarding the US-China trade war, leading to a limited risk appetite in the near term due to rising market volatility and uncertainty [2][3] - There is optimism regarding China's resilience in the trade war, with expectations that the US may lower tariffs on China within three months [3][8] - Local investors have low expectations for upcoming policy easing measures in China, anticipating that significant easing will only occur if clear signs of economic slowdown appear [9] - Long-term economic reforms are deemed more important than short-term stimulus, with a focus on enhancing the social safety net and supply-side reforms to support consumption growth [10] Summary by Sections Concerns Over US-China Trade War - Onshore clients are exploring game theory frameworks to assess US-China economic competitiveness and the Trump administration's goals [2] - Key concerns include the potential for coordinated tariffs blocking Chinese exports and escalation beyond a trade war [2] Optimism on China's Resilience - Local clients believe that US importers have limited short-term flexibility to find alternative sources under tariff pressure [3] - Many expect the US to lower China-focused tariffs and grant firm-level tariff exemptions to stabilize the market [3][8] Expectations for Policy Easing in China - Onshore investors have lowered expectations for aggressive fiscal stimulus, with many anticipating the next round of easing after the July Politburo meeting [9] - Local clients think that rate and RRR cuts may only occur if there are clear signs of economic slowdown [9] Importance of Long-term Economic Reform - Most local clients emphasize the need for long-term reforms over short-term stimulus, focusing on policies that enhance the social safety net and support domestic demand [10] - Structural monetary policies are considered more important than broad-based easing, with expectations for targeted easing for companies and households affected by tariffs [10]

Investment Rating - The report indicates a preference for short positions in CNY CFETS index and short SGDNEER basket, suggesting a bearish outlook on these currencies [3][4]. Core Insights - Asian economies show limited evidence of diversifying away from US assets, primarily due to low domestic yields and growth concerns [1][2]. - Malaysia, Singapore, China, and India exhibit signs of increased USD FX hedging and asset diversification, while Japan sees foreign inflows into its assets [1][2][28]. - The report highlights that Singapore and Hong Kong have the highest US asset holdings as a percentage of GDP, indicating significant room for diversification [5][6]. Summary by Sections Section 1: Diversification Potential - Singapore and Hong Kong lead in US asset holdings relative to GDP, followed by Taiwan, Japan, and Korea [5][6]. - China’s US asset holding is relatively low at 12% of GDP when accounting for indirect holdings [5][6]. Section 2: Willingness to Diversify - China is diversifying its reserves by increasing gold holdings, now at nearly 6% of total reserves, but has not sold US treasuries [11][13]. - Taiwan's central bank holds over 80% of its FX reserves in US treasuries, indicating confidence in these assets despite potential diversification [18][19]. - Korea's National Pension Service plans to increase international asset exposure to 60% by 2028, showing no intent to repatriate assets [25][26]. Section 3: Market Observations - Malaysia's government is guiding a shift towards domestic asset allocation, with EPF reducing overseas exposure [34][35]. - Singapore's large US asset holdings are supported by its status as a financial hub, with signs of month-end repatriation flows [38][39]. - India's central bank emphasizes gold accumulation for reserve diversification amid geopolitical uncertainties [47][48]. Section 4: Currency and Investment Trends - The report notes a shift in international investors' preferences from long-duration to short-duration US treasuries, contributing to a steepening of the UST curve [59][60]. - Malaysia's foreign currency deposit ratio has increased, indicating a trend towards domestic investments [55][57].

Investment Rating - The report raises the 2025 Southbound flow forecast from US$75 billion to US$110 billion, indicating a positive investment outlook for Southbound flows [4][39][41]. Core Insights - Southbound investors have shown strong net buying activity, with US$78 billion in net purchases year-to-date, representing 75% of the expected full-year inflows for 2024 [1][9]. - The performance of the Hong Kong market is increasingly correlated with Southbound flows, suggesting that these investors are gaining pricing power [2][11]. - The report identifies key drivers for Southbound inflows, including attractive H-share profiles, increased domestic institutional investment, and hedging demand against potential RMB depreciation [10][41]. Summary by Sections Southbound Flows and Market Impact - Southbound investors currently hold US$577 billion of HK-listed stocks, accounting for 13% of the market cap of eligible stocks, up from 10% a year ago [2][11]. - The turnover contribution from Southbound investors has increased from 17% in 2024 to 21% year-to-date [2][11]. - The report notes that the Southbound flows have become a significant influence on the Hong Kong market, with a notable increase in ownership and turnover [11][12]. Investor Composition - Both onshore retail and institutional investors are participating in Southbound trading, with institutional investors estimated to account for at least half of the Southbound ownership [3][25]. - Domestic mutual funds have raised their equity allocation to historical highs, contributing to the Southbound inflows [28][39]. Forecast and Drivers - The report forecasts that Southbound flows could reach US$110 billion in 2025, driven by factors such as the attractiveness of H-shares, increased dual-primary listings, and potential dividend tax exemptions for Southbound investors [4][39][43]. - The report highlights that the home-coming of US-listed Chinese companies could further boost Southbound buying, with Alibaba's dual-primary listing serving as a precedent [41][50]. Investment Opportunities - A refreshed Southbound Favorite Portfolio includes 50 companies identified for their scarcity value, valuation discounts, and high sensitivity to Southbound flows, expected to outperform if inflows remain strong [5][49]. - The report also screens for 33 ADRs eligible for HK dual-primary listing, which may benefit from Southbound buying post-inclusion [5][50].

Investment Rating - The report maintains a "Buy" rating on Cell & Module and Film, while it has a "Sell" rating on Glass, Poly, Wafer, and Equipment [4]. Core Insights - The profitability of the solar industry is expected to face deterioration for Cell and Module, while Glass may see temporary improvement due to price hikes [6][14]. - The report highlights a significant decline in solar capital expenditure, projected at -55% year-over-year in 2025, alongside a lower capacity utilization rate averaging 59% from 2025 to 2030 [4]. - The report indicates that upstream pricing in China has started to lose momentum as the peak of rush installations is ending, while US module pricing has jumped due to a 90-day tariff exemption [19]. Summary by Sections Pricing Dynamics - As of April 17, 2025, month-to-date (MTD) spot prices for Poly/Wafer/Cell/Module/Glass/Film/Inverter in China showed average changes of -1%/-0.3%/-7%/+0.5%/+5%/+0%/+1%, while overseas module prices increased by 20% in the US [19]. - The report notes that inventory days across the value chain have improved to below 20 days, except for Poly at 40 days and Glass at 27 days, driven by strong domestic demand [13]. Production and Demand - Production volumes across the solar value chain are expected to recover significantly in April, with Poly/Wafer/Cell/Glass/Module projected to increase by +4%/+17%/+29%/+9%/+31% month-over-month [12]. - The report anticipates a decline in inventory levels across the value chain, with a lowered production-to-demand ratio at 94% in April compared to 104% in March [15]. Profitability Trends - The average cash gross profit margin (GPM) for Poly/Wafer/Cell/Module/Glass/Film in April showed changes of -0.3pp/+0.4pp/-11pp/-6pp/+3pp/+1pp, indicating a decline in profitability for Cell and Module [10]. - Monthly average cash profitability for the companies covered is expected to remain largely flat month-over-month in April, although it is better than the first quarter of 2025 [7].