Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - A-share trading volume reached a year-to-date low in mid-April, influenced by pre-holiday caution and uncertainties regarding domestic stimulus and US/China trade negotiations [4] - Post-Labor Day, trading volumes rebounded approximately 20% from pre-holiday levels, indicating a recovery in market liquidity, with an average daily volume of $181 billion in May, a 10% increase compared to April [4] - Volatility peaked after Liberation Day but has since decreased as trade-related concerns eased [4] - Average spreads narrowed by approximately 1-1.5 basis points in May compared to April, with the most significant reduction occurring in the first 30 minutes of trading [4] - The average quote size at the top of the order book increased by roughly 20% compared to April, suggesting lower transaction costs due to tighter spreads and deeper liquidity [4] - CSI300 stocks' volume participation rose from 18% to 25% after the Labor Day holidays [4][16] - Onshore Equity ETFs saw the largest weekly inflows during the week of April 11, primarily driven by CSI300 ETFs, although these inflows were followed by three weeks of net outflows [4] - Chinese Equities experienced moderate net buying activity for four consecutive weeks, with A-shares accounting for 70% of net buying flows [4] - Gross allocation to China has decreased from year-to-date highs, currently at 4.7%, while net allocation has increased to 8.6% [4] Summary by Sections Liquidity Overview - A-share trading volume dropped to a year-to-date low in mid-April due to investor caution [4] - Recovery in liquidity was observed post-Labor Day with a significant rebound in trading volumes [4] Foreign Positions & Flows - The report indicates a moderate net buying activity in Chinese equities, with A-shares dominating the flows [4] Sector Performance - Industrial, Finance, and Technology sectors saw the largest month-over-month volume increases, while Property and Utilities experienced reductions [4]

市场洞察 - Marquee --- Market Insights - Marquee Market Insights | Markets | Equities 市场洞察 | 市场 | 股票 markets / macro 市场 / 宏观 S&P went wire-to-wire this week ... convincingly recovered the 200-day moving average ... and, having rallied 20% o the April lows, now sits just 3% from the February highs. 标普本周⼀路上涨……令⼈信服地收复了 200 ⽇均线……⾃四⽉低点反弹了 20%，现距⼆⽉⾼点 仅 3%。 a market framework: ⼀个市场框架： i. locally, the administration put a few more points on the board (witness price action in the stocks most levered to the ME deals). i. ...

Investment Rating - The investment rating for iFlytek is Neutral, with a 12-month price target of Rmb55.30, indicating an upside potential of 15.9% from the current price of Rmb47.70 [9]. Core Insights - iFlytek has initiated a diverse AI monetization strategy targeting ToC, ToB, and ToG clients, focusing on API token fees, industry-specific AI solutions, and SOE/government projects [2][3]. - The company launched an "On-Prem LLM All-in-One solution" for enterprises, allowing clients to deploy multiple AI models on a single machine, enhancing operational efficiency [3]. - iFlytek's AI models are being integrated into automotive solutions, with applications in smart cockpits and audio systems, showcasing the company's expansion into the automotive sector [4][6]. Summary by Sections AI Monetization Strategy - iFlytek's AI monetization strategy includes the Spark LLM API token fee, industry solutions in education, healthcare, and automotive, and customized AI model services for SOE/government projects [2]. - The upgraded Spark reasoning model X1 was released in April 2025, with plans for continued in-house development of AI foundation models to optimize performance [2]. Enterprise Solutions - The "On-Prem LLM All-in-One solution" launched in April 2025 supports multiple AI foundation models for enterprise clients, allowing for customized solutions across various industries [3]. - Key features of the solution include Spark Insight for sales conversation analysis, OceanDoc for presentation generation, and Spark Wallex for integrating AI into hotel software applications [3]. Automotive Applications - iFlytek showcased its smart cockpit and smart audio solutions at the Autoshow Shanghai, with AI models adopted by over 16 automotive brands [4][6]. - The AI agents in the smart cockpit can summarize user-generated content and provide tailored recommendations, enhancing the passenger experience [6]. Financial Projections - Revenue projections for iFlytek indicate growth from Rmb23.34 billion in 2024 to Rmb41.02 billion by 2027, with EBITDA expected to rise from Rmb2.53 billion to Rmb6.39 billion in the same period [9]. - The company is expected to achieve an EPS of Rmb0.24 in 2024, increasing to Rmb1.95 by 2027, reflecting strong growth potential [9].

Investment Rating - The report raises the S&P 500 return and earnings forecasts, indicating a positive outlook for the index with new 3- and 12-month return forecasts of +1% and +11% respectively [2] Core Insights - The report highlights that lower tariff rates, improved economic growth, and reduced recession risks have led to an upward revision of S&P 500 earnings and return forecasts [2][4] - The revised S&P 500 EPS forecasts are $262 in 2025 and $280 in 2026, reflecting a growth of +7% year-over-year for both years [2][4] - The current P/E ratio of 21x is in the 90th percentile since 1990, with a forecasted 12-month P/E valuation of 20.4x, indicating reduced uncertainty and faster earnings growth [2][8] - The report emphasizes the importance of focusing on stocks with high pricing power to maintain margins amid elevated input costs [2][22] Summary by Sections Earnings Forecast - The report revises the S&P 500 EPS growth estimates to +7% for both 2025 and 2026, up from previous estimates of +3% and +6% respectively, due to a better-than-expected economic outlook [4][5] Valuation - The current P/E of 21x is noted to be 5% below the peak of 22x earlier this year, with an updated fair value estimate reflecting lower inflation and renewed confidence in fundamentals [2][8] Positioning - The report indicates that light equity investor positioning suggests potential for continued near-term market upside, with the US Equity Sentiment Indicator registering -1.5 standard deviations [2][14] Pricing Power - The report continues to recommend stocks with high pricing power, as they are expected to outperform in environments of weakening profit margins due to increased tariff rates [22][27] Big Tech and AI Stocks - The report anticipates that AI stocks will regain momentum as tariff-related volatility diminishes, with strong earnings growth profiles expected from AI-exposed equities [3][27]

Investment Rating - The report indicates a neutral stance on equities, shifting from an underweight position previously [10]. Core Insights - A better-than-expected outcome from US/China trade talks has led to a reduction in tariff tensions, prompting multiple global forecast revisions [2][6]. - Regional equity market earnings have been raised due to a more favorable growth outlook, with expected earnings growth for the MSCI Asia Pacific ex-Japan index at 9% for both 2025 and 2026 [14][18]. - The report anticipates moderately higher returns driven by improved earnings and a favorable macro backdrop, with a 12-month target for the MSCI Asia Pacific index set at 660, implying an 8% total return [18][28]. Summary by Sections US/China Trade Talks - The US and China announced a 90-day pause in tariffs, reducing the US effective tariff rate on Chinese exports to 39% from 107%, and the China effective tariff rate on US exports to around 30% from 144% [3][6]. - Following the announcement, the regional index gained 3.2% in three trading days, with significant gains in Taiwan, China Offshore, and India markets [3][4]. Global Forecast Revisions - The reduction in tariffs has led to an increase in the US real GDP growth forecast for 4Q from 0.5% to 1.0% and a decrease in the probability of recession from 45% to 35% [6][11]. - In China, GDP growth forecasts for 2025 and 2026 have been raised to 4.6% and 3.8%, respectively, with a corresponding increase in MSCI China index earnings growth forecasts [7][11]. Regional Earnings Growth - Earnings growth for the MSCI Asia Pacific index has been revised up by 2 percentage points for 2025 and 2026, primarily due to better macro growth expectations in China and US-exposed markets [14][18]. - Individual market revisions include a cumulative +5pp for China, +4pp for Hong Kong, Taiwan, and Korea, and +3pp for Japan and China A [14][15]. Return Expectations - The report expects 3-month and 12-month returns for the MSCI Asia Pacific ex-Japan index of 0% and 8% in USD price terms, driven by better earnings growth and a higher target P/E multiple of 13.4x [18][28]. - The report emphasizes the importance of alpha opportunities over beta, given that markets have already priced in much of the tariff relief [28][29]. Market Allocation and Themes - The report favors China and Japan, with a domestic sector tilt, and highlights themes such as resilience in a challenging macro context, AI beneficiaries, and shareholder yield [29][30]. - The report also notes the impact of USD depreciation on market differentiation, identifying winners and losers [32][29].

Investment Rating - The report maintains a "Buy" rating for NetEase Inc. (NTES) with a 12-month price target of $140.00, indicating an upside potential of 30.7% from the current price of $107.11 [1]. Core Insights - NetEase reported a strong performance in 1Q25, with game revenue increasing by 15% year-over-year (yoy) and operating profit rising by 34% yoy, alleviating concerns regarding its legacy and mobile games [1][22]. - The growth is expected to continue due to the success of newly released titles, a recovery in legacy titles, and improved promotional strategies [1][18]. - The report anticipates low to mid-teens yoy game revenue growth and further margin expansion for the remainder of 2025 [1]. Summary by Sections Financial Performance - In 1Q25, PC games revenue surged by 84% yoy, driven by successful titles such as Marvel Rivals and Where Wind Meets, alongside contributions from Blizzard games [2][22]. - Historical profit margins are at a high due to disciplined expense management and sequential gross profit margin (GPM) expansion [3]. Revenue and Earnings Forecasts - Revenue forecasts for 2025E have been revised upwards by 1.3% to 114,803.9 million RMB, with net profit estimates increased by 10.4% to 38,685.9 million RMB [20][21]. - The report projects a total revenue growth of 9.0% for 2025, with EBITDA growth of 18.6% and EPS growth of 16.6% [12]. Game Pipeline and Strategy - NetEase is focusing on a globalization strategy, with plans to release more titles targeting international markets, particularly in the PVP genre [17][25]. - Key upcoming titles include Marvel Mystic Mayhem and Destiny: Rising, with a focus on competitive gameplay to leverage R&D expertise [25][38]. Market Position and Valuation - The stock is currently trading at a P/E ratio of 14X for 2025E, which is considered a discount compared to peers and historical averages [18]. - The report highlights that international games revenue is expected to grow to 12.6% of total revenue by 2025E, driven by new global titles [33].

Investment Rating - The report upgrades the investment rating for several companies in the semiconductor sector to "Buy," including Cambricon, SMIC, AMEC, and VeriSilicon [2][62]. Core Insights - The semiconductor industry in Greater China is experiencing a positive trend, driven by increased market demand, particularly in advanced technologies such as generative AI and ADAS [3][4]. - The report highlights a significant year-over-year growth in integrated circuit (IC) production and imports, indicating a recovery from previous weak seasons [1][3]. - The overall semiconductor revenue in China showed a 9% year-over-year increase in March 2025, reflecting a steady recovery from earlier months [4][27]. Summary by Sections IC Production and Imports - IC production volume in March 2025 increased by 9.2% year-over-year, reaching 42 billion units, compared to a 4.4% increase in January and February 2025 [1][25]. - IC import value rose by 11.1% year-over-year to US$35 billion in April 2025, while import volume increased by 7.6% year-over-year to 50 billion units [9][19]. - The average selling price (ASP) of IC imports increased by 3.3% year-over-year in April 2025 [1][21]. Market Demand and Revenue - The report indicates that the semiconductor market is benefiting from strong company-specific drivers, including new product launches and market share gains [2][3]. - Taiwan's semiconductor revenue grew by 34.1% year-over-year in April 2025, with foundry revenues up by 43.7% year-over-year [7][8]. - The total revenue for China's semiconductor sector reached US$15.4 billion in March 2025, marking a continued growth trend [4][27]. Inventory and Supply Chain - The days of inventory (DOI) for China's electronics sector was reported at 53 days in March 2025, consistent with historical averages [1][17]. - The report notes a healthy inventory level, suggesting stability in the supply chain for semiconductor manufacturers [4][17].

ISSUE 139 | May 15, 2025 | 11:35 AM EDT FED INDEPENDENCE: HOW CONCERNING? President Trump's public criticism of the Fed and, more importantly, his attempts to turn words into action by setting in motion a challenge to the landmark ruling that has prevented presidents from removing officials of independent agencies without cause have raised serious concerns about Fed independence. We talk to former Fed Vice Chair Richard Clarida, the Hoover Institution's John Cochrane, and GS' Jan Hatzius and Joseph Briggs, ...

Investment Rating - The report indicates a positive outlook for the US economy, with raised growth forecasts and lowered recession odds, suggesting a favorable investment environment [1][2][4]. Core Insights - The report highlights a significant reduction in US recession odds to 35% and an increase in the 2025 growth forecast by 0.5 percentage points to 1% [4][5]. - The effective US tariff rate is expected to increase by 13 percentage points, which is lower than previous estimates, indicating a more favorable trade environment [3][9]. - The S&P 500 return forecasts have been revised upwards to +1% for 3 months and +11% for 12 months, with target levels set at 5900 and 6500 respectively [7][8]. - China's real GDP growth forecast has been raised to 4.6% for 2025, reflecting improved economic conditions [8]. Summary by Sections Economic Forecasts - The US growth forecast has been raised due to positive developments in tariff negotiations, with recession odds lowered to 35% [2][4]. - The report anticipates a series of three rate cuts by the Federal Reserve starting in December, later than previously expected [5][6]. Tariff Implications - The US-China tariff rate is now expected to increase by 13 percentage points, which is less than the previously anticipated 15 percentage points [3][9]. - The report suggests that the reduction in tariff rates will positively impact the S&P 500 and overall market sentiment [7][8]. Currency Dynamics - The report identifies favored emerging market currencies in Asia, including KRW, TWD, MYR, and SGD, as potential investment opportunities [12][18]. - It notes that the USD's underperformance is increasingly led by emerging markets rather than the DXY index, indicating a shift in currency dynamics [4][35]. Trade and Market Sentiment - The report discusses the potential for "currency deals" within trade agreements that could strengthen underperforming Asian currencies [37]. - It emphasizes that recent dollar weakness is benefiting Asian currencies, particularly TWD, CNH, and IDR, suggesting a favorable environment for emerging market currencies [38].

Investment Rating - The report rates NARI Technology as a "Buy" with a 12-month target price of Rmb31.8, implying a 39% upside based on an unchanged 25X 2026E P/E [1][12][15]. Core Insights - NARI Technology is expected to achieve a revenue growth of 13% year-on-year (yoy) in 2025E, surpassing its target of 12% yoy growth, supported by a backlog of Rmb50.7 billion and a strong order intake of over 50% yoy in 1Q25 [1][2][15]. - The company anticipates that its Ultra-High Voltage (UHV) revenue will double in 2025E, driven by significant project execution and new contracts [1][4][7]. - NARI Technology is positioned to benefit from China's structural smart grid needs, with a focus on overseas markets and new growth drivers such as AI integration and market-based electricity price reform [1][5][10][15]. Summary by Sections Revenue and Growth - The company targets Rmb64,500 million in revenue for 2025E, indicating a 12% yoy increase, marking a shift in guidance to a more conservative growth outlook after eight years [2][15]. - The 1Q25 revenue growth was reported at 16% yoy, with power grid automation growing by 25% yoy, primarily due to UHV revenue recognition [1][4]. Segment Performance - **Grid Automation**: Revenue in this segment was Rmb28.5 billion in 2024, with a growth expectation of over 10% yoy in 2025E, driven by UHV revenue [4]. - **Grid Digitalization**: This segment recorded Rmb12.4 billion in revenue in 2024, with a projected growth of close to 10% in 2025E, supported by national policies promoting AI integration and virtual power plants [5]. - **Power Generation**: Revenue reached Rmb12.2 billion in 2024, with a growth expectation of 14% yoy in 2025E, despite a moderation in installation growth [8]. - **Industrial Internet**: The segment faced a decline of 24% yoy in 2024 but is expected to return to growth in 2025E [9]. Overseas Business - NARI Technology's overseas revenue reached Rmb3.28 billion in 2024, a 135% yoy increase, contributing 6% to total revenue, with expectations for continued growth in 2025E [10][15]. Expense Management - The company guided an expense of Rmb7,741 million for 2025E, indicating a 19.6% yoy increase, primarily due to increased R&D investments [11][15]. Valuation and Financial Metrics - The report maintains earnings forecasts unchanged, with a focus on a stable margin profile supported by necessary investments in R&D and a reclassification of interest income [12][15].