10 May 2025 | 5:55AM HKT China Semis: Maxio (688449.SS): Local memory controller IC, expanding to PCIe 5.0 solution and enterprise market We talked to Maxio (688449.SS, Not Covered) management recently. Maxio is a local memory controller IC supplier, expanding from consumer electronics to enterprise market. Overall, management is positive on company's product migration from PCIe 4.0 to PCIe 5.0 memory controller IC, and expects revenue contribution to start from this year, capturing opportunities from risin ...

9 May 2025 | 1:23PM EDT Global Economics Wrap-Up: May 9, 2025 Global Economics 5/9/25 10:20AM ET Joseph Briggs Andrew Tilton +852-2978-1802 | andrew.tilton@gs.com Goldman Sachs (Asia) L.L.C. Katya Vashkinskaya +44(20)7774-4833 | katya.vashkinskaya@gs.com Goldman Sachs International Jessica Rindels +1(972)368-1516 | jessica.rindels@gs.com Goldman Sachs & Co. LLC Sarah Dong +1(212)357-9741 | sarah.dong@gs.com Goldman Sachs & Co. LLC Blair Turoff +1(212)357-7951 | blair.turoff@gs.com Goldman Sachs & Co. LLC In ...

10 May 2025 | 4:20AM SGT Asia-Pacific Weekly Kickstart MXAPJ stayed around its ytd highs; Hong Kong and China A led this week; Strong foreign inflows continued despite a stronger Dollar MXAPJ rose 0.3%, led by Hong Kong (+4%), China-A (+2%), and Singapore (+1%), while India (-2%), Australia (-1%), and Indonesia (muted) lagged. Tech Hardware & Semis, Transportation, and Insurance & Financial Services led Health Care, Energy, and Software. EM Asia experienced strong foreign inflows totaling US$4.1bn, led by T ...

Investment Rating - The report maintains a "moderately loose" policy stance from the PBOC, indicating a continued easing bias but with a less dovish tone compared to previous communications [1][2]. Core Insights - The PBOC emphasizes the need to balance support for the real economy with the health of the banking system, suggesting a shift in focus towards targeted easing measures rather than broad monetary policy adjustments [1][2][3]. - The central bank has replaced "interest rate policy" with quantity-based tools such as MLF loans and relending/rediscounting, indicating a preference for executing existing policies and a data-driven approach to monetary easing [3][4]. - The PBOC aims to lower comprehensive financing costs for the real economy by reducing non-interest costs and adjusting loan pricing, which may limit the scope for further policy rate cuts [4][7]. Summary by Sections Monetary Policy Approach - The PBOC's Q1 monetary policy report reflects a measured and reactive approach to easing, focusing on quantity-based tools and targeted measures [1][2][3]. - The central bank has indicated a preference for relending programs over broad measures like RRR cuts, suggesting a more nuanced approach to monetary policy [2][3]. Interest Rates and Financing Costs - The PBOC is committed to driving down comprehensive financing costs, particularly by reducing banks' liability costs and adjusting loan pricing [4][7]. - The report highlights the importance of managing interbank liquidity through overnight repo rates and a defined interest rate corridor, indicating a strategic shift in liquidity management [9]. Inflation and Economic Coordination - The PBOC acknowledges deflationary pressures due to weak demand recovery and over-competition, emphasizing that monetary policy alone is insufficient for reflation [8]. - The report calls for better coordination between fiscal, monetary, and other policies to enhance economic recovery, leveraging China's relatively lower net debt compared to other major economies [8].

Investment Ratings - The report maintains a Buy rating for several companies including Kinder Morgan (KMI), Devon Energy (DVN), Par Pacific Holdings (PARR), Eversource (ES), Shoals Technologies (SHLS), Patterson-UTI Energy (PTEN), and Nucor (NUE) [1][2][5][6][8][10][40]. Core Insights - Increased investor interest has been noted in various sectors, particularly in midstream, E&Ps, majors & refiners, utilities, clean technology, energy services, and metals & mining [1][2][5][6][8][10]. - The earnings season has highlighted diverse responses from E&P operators to the weaker oil price environment, with some maintaining activity while others reduce it [4][27]. - The report emphasizes the importance of capital efficiency and free cash flow generation in the current macroeconomic context, particularly for E&Ps and energy services [4][9][31]. Midstream - Kinder Morgan (KMI) is experiencing heightened interest due to steady EBITDA generation and project announcements, closing the growth rate gap with peers [1]. - The company is expected to outperform due to its insulated growth backlog and significant discount to gas peers [1]. E&Ps - Devon Energy (DVN) has garnered attention due to strong 1Q25 results and lower capital spending guidance for FY25, with a focus on maintaining operational efficiencies [2][4]. - Investor sentiment is mixed regarding E&P adjustments, correlating with oil demand outlook and potential recession risks [4][27]. Majors & Refiners - Par Pacific Holdings (PARR) has seen increased investor interest, particularly regarding refining margins and capital allocation priorities [5]. - The company has returned its Wyoming refinery to normal operations ahead of schedule, contributing to positive sentiment [5]. Utilities - Eversource (ES) is attracting investor interest as it trades at a significant discount compared to more defensive utilities, despite regulatory uncertainties [6]. - The earnings season has shown confidence in utilities' earnings execution and growth for 2025 and 2026, with ongoing capital investment opportunities [6]. Clean Technology - Shoals Technologies (SHLS) has seen a stock increase of approximately 28% following a strong earnings report and positive guidance for 2025 [8]. - The company’s shift to a domestic manufacturing strategy is viewed as a competitive advantage [8]. Energy Services - Patterson-UTI Energy (PTEN) reported a 1Q earnings beat and is expected to maintain a steady rig count due to high contracted rigs [9]. - The company remains committed to share buybacks, which could lead to a significant payout ratio [9]. Metals & Mining - Nucor (NUE) is favored due to its scale and operating leverage, with a solid balance sheet and attractive valuation compared to historical averages [10]. - The US steel industry outlook is constructive, supported by order backlogs and market share gains [10].

Investment Rating - The report indicates an optimistic outlook for China's manufacturing sector, with an increased forecast for export growth and a larger current account surplus expected by 2025 [3][69]. Core Insights - China's manufacturing sector remains the largest globally, with a significant trade surplus, driven by low production costs and strategic investments in high-tech sectors [4][6]. - Despite challenges such as US tariffs and global economic slowdowns, China's policymakers prioritize industrial growth over consumption [3][54]. - The report anticipates that real exports will be roughly flat in 2025, a revision from a previous forecast of a -5% decline, and expects a current account surplus of 2.3% of GDP in 2025 [3][69]. Summary by Sections Manufacturing Sector Overview - China's manufacturing ecosystem is characterized by low costs across production factors, including labor, capital, land, and energy, which collectively enhance competitiveness [19][22][26]. - The report highlights that China's labor costs remain significantly lower than those in developed markets, despite rising over the years [20][24]. Export Dynamics - China's exports are gaining market share in various sectors, particularly mid-to-high tech, while facing challenges in lower-tech sectors [14][15]. - The report notes that China's export success is attributed to a substantial competitiveness gap, especially in emerging markets [15][19]. Policy and Economic Strategy - The Chinese government continues to support "self-reliant" investment and innovation, particularly in high-tech sectors like electric vehicles, robotics, and semiconductors [46][48]. - The "Made in 2025" initiative and recent policy shifts emphasize technological advancement and reducing dependence on foreign supplies [52][53]. Current Account and Currency Outlook - The current account surplus is projected to strengthen, with expectations of a gradual appreciation of the renminbi against the US dollar [69][70]. - The report suggests that the undervaluation of the renminbi provides a competitive edge for exports, with forecasts indicating a shift towards a stronger currency in the coming year [70][71].

Investment Rating - The report indicates an upside risk to oil price forecasts due to recent trade de-escalation, estimating a potential increase of $3-4 per barrel to Brent/WTI oil price forecasts of $60/56 for the remainder of 2025 and $56/52 in 2026 [6][26]. Core Insights - The potential election of President Trump poses both upside risks to oil price volatility and downside risks to prices, primarily through impacts on oil demand from tariffs [5][26]. - Recent trade de-escalation has led to an estimated increase in global oil demand growth forecasts for 2025 and 2026 by 0.3 million barrels per day (mb/d) and 0.1 mb/d, respectively, raising demand growth to approximately 0.6 mb/d and 0.4 mb/d [6][26]. - President Trump's inferred preference for WTI oil prices is around $40-50 per barrel, with a tendency to call for lower prices when WTI exceeds $50 and for higher prices when below $30 [13][22]. Summary by Sections Section 1: Price Forecasts - The report estimates an upside risk of $3-4 per barrel to Brent/WTI oil price forecasts due to trade de-escalation and reduced recession risks [6][26]. - The expected global oil demand growth for 2025 and 2026 has been adjusted upwards due to improved GDP growth outlooks in the US, China, and Europe [6][26]. Section 2: Presidential Influence - President Trump's social media activity indicates a strong focus on energy markets, with nearly 900 posts related to energy since joining Twitter [8][22]. - The analysis reveals that Trump's posts about oil prices tend to increase as elections approach, reflecting his political strategy [8][22]. Section 3: Sanctions and Price Sensitivity - The report notes that Trump's propensity to post about oil sanctions decreases as prices rise, particularly when WTI is in the $60s or $70s, suggesting limited upside risks to prices from potential drops in sanctioned supply [22][26]. - The findings indicate that underinvestment and OPEC+ production quotas are more significant constraints on production volumes than sanctions [22][26].

Investment Rating - The report maintains a positive outlook on the consumer staples sector, with a preference for Beverage, Pet Foods, Dairy, and Beer categories, highlighting strong potential for margin expansion and shareholder returns [13]. Core Insights - Consumption demand is stabilizing, with 1Q25 showing 4% sales growth and 5% net profit growth, indicating a gradual recovery despite lingering deflationary pressures [1][2]. - Key themes for 2025 include margin resilience, unique product cycles, and a focus on shareholder returns, as companies navigate a challenging macro environment [1][2][13]. - The report identifies a divergence in performance among sub-sectors, with Food & Beverage and Pet Care sectors outperforming, while Condiments and Spirits lag behind [2][17]. Summary by Sections Market Overview - Retail demand recovery is gradual, with basic consumer goods seeing normalizing shipment and improving inventory cycles into 2Q25 [11]. - Value-focused trends persist, with economists projecting 0% CPI growth for 2025, leading to conservative average selling price trends across staples [11][12]. Competitive Landscape - Increased competition is expected in consumer sectors, particularly in beverages and snacks, with companies focusing on margin expansion through efficiency measures [9][15]. - Top players are outperforming, indicating a trend towards market consolidation, while smaller players may still find growth opportunities in niche markets [9][10]. Financial Performance - The staples sector is currently trading at an average forward P/E of 20x, with a projected earnings CAGR of 13% from 2025 to 2027 [2][13]. - Key stock picks for 2Q include Tingyi, CR Beverage, Eastroc, and Yanker, all of which are expected to benefit from strong product cycles and margin expansion [13][15]. Sector Preferences - The report emphasizes a preference for Beverage due to its secular growth potential, followed by Pet Foods, Dairy, and Beer, with specific stock recommendations for each category [13][17].

Investment Rating - The report indicates a medium-term bearish outlook for USD/Asia currencies, suggesting a downward trajectory for the USD against Asian currencies [3][18]. Core Insights - The US-China trade talks resulted in a larger-than-expected reduction in tariffs, leading to a decrease in USD/CNY and an initial increase in other USD/Asia pairs [3][5]. - The US economics team revised their 2025 GDP growth forecast to 1.0% from 0.5% and reduced recession odds from 45% to 35%, which may limit the downside for the USD compared to a recession scenario [5][6]. - Key themes include ongoing diversification away from US assets, continued conversion of USD by Asian exporters into local currencies, and potential strength in Asian currencies if trade deals are reached [3][11][15]. Summary by Sections Changes Observed - The reduction in tariffs has led to a revision of USD/Asia forecasts, with expectations for USD/CNY to drift towards 7.0 [4][15]. - The US left-tail risk has decreased, improving the outlook for US assets and potentially reducing broad USD bearishness [5][18]. Unchanged Factors - The USD remains overvalued by approximately 17% according to the GS DEER model, indicating that the diversification theme away from US assets is still relevant [6][10]. - Asian exporters are expected to continue selling USD, with significant increases in foreign currency deposits in several Asian countries [11][9]. Implications for Asian FX - The report anticipates that if trade deals are finalized, Asian currencies will likely strengthen against the USD, with favored currencies being KRW, TWD, MYR, and SGD [3][18]. - The path of least resistance for USD/Asia is expected to be downward, especially if trade negotiations lead to a narrower trade deficit with the US [15][18].

Investment Rating - The report raises the real GDP growth forecast for China to 4.6% in 2025 and 3.8% in 2026, up from previous estimates of 4.0% and 3.5% respectively [1][10][19] Core Insights - The US-China trade talks resulted in larger-than-expected tariff rollbacks, with US tariffs on Chinese goods dropping to 30% for an initial 90 days, significantly reducing the previous tariff burden [2][8] - The effective US tariff rate on China is estimated to be around 39%, down from 107% previously, while China's effective tariff rate on the US is around 30%, down from 144% [2][10] - The report anticipates that Chinese real exports will be roughly flat in 2025/26, a significant improvement from the previous forecast of a -5% annual decline [1][10] Summary by Sections Economic Impact - The report indicates that the tariff rollbacks will lead to a smaller drag on China's growth, resulting in less demand for domestic policy easing than previously expected [8][10] - The net export contribution to China's GDP growth is now expected to be +0.1 percentage points, compared to a previous expectation of -0.5 percentage points [10] Policy Adjustments - Monetary policy easing expectations have been adjusted to only one 10 basis point cut in Q4 2025, down from two cuts previously anticipated [1][10] - The augmented fiscal deficit estimate for China has been lowered to 13.0% of GDP for 2025, down from 13.5% [1][10][16] Growth Forecast Revisions - The report raises sequential growth forecasts for Q2 and H2 2025, resulting in a 0.9 percentage point increase on a Q4/Q4 basis [10][19] - The revised forecasts for China's GDP growth reflect a more stable outlook amid ongoing trade negotiations, with balanced risks primarily surrounding US-China trade relations [9][10]