Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Chinese exports showed a year-over-year growth of 10.1% in real terms for Q1 2025, while nominal exports grew by 5.6% due to lower export prices across all categories [7] - The report anticipates a significant slowdown in export volume growth in the coming months if tariffs are maintained, projecting a decline of 5% in total goods export volume for 2025 [7][50] - Chinese nominal imports fell by 7.2% year-over-year in Q1 2025, primarily due to decreasing import volumes [25] - The current account surplus is expected to decrease to 1.6% of GDP in 2025 from 2.2% in 2024, driven by a narrower goods trade surplus and a widening services trade deficit [7][55] Summary by Sections Exports - Chinese exports remained solid in Q1 2025, with a 10.1% year-over-year growth in real terms, while nominal exports grew by 5.6% [7] - The decline in export prices was broad-based, affecting all categories, with the most significant increases in real terms for stone/glass/metals and transportation equipment [7][21] - Exports to Africa saw the highest year-over-year increase in Q1 [18] - New export orders under both NBS and Caixin manufacturing PMIs fell sharply in April amid higher US tariffs [23] Imports - Nominal imports decreased by 7.2% year-over-year in Q1 2025, with the weakest growth in stone/glass/metals due to lower gold imports [25] - Mechanical machinery and electric equipment saw the strongest import growth, while import prices for stone/glass/metals increased the most [25][39] - Imports fell for all regions except Japan, Korea & Taiwan, and ASEAN [33] Current Account and Balance of Payments - The report projects a decline in China's goods trade surplus to 3.7% of GDP in 2025 from 4.0% in 2024 [7] - The broad balance of payments (BBOP) is expected to remain unchanged at 0.4% of GDP in 2025, with significant net FDI outflows [8][57] - The current account balance is projected to narrow, reflecting a combination of a smaller goods trade surplus and a wider services trade deficit [55]

Investment Rating - The report maintains a cautious outlook on US yields, suggesting that any material cheapening could present a buying opportunity for long positions, particularly in the context of broader growth expectations [1][2]. Core Insights - The report indicates that recent activity data has alleviated fears of an imminent economic deterioration, leading to a reassessment of Fed rate cut timing, now expected in July, September, or October [2]. - There is a belief that the recent dynamic of tariff de-escalation could extend in the near term, which may influence inflation and Fed signals [2]. - The report highlights a preference for buying 3m10y payers on the 3m 5s10s30s payer fly as a low-cost hedge against rising yields [1][5]. Summary by Sections United States and Canada - The labor market's health leaves rates pricing vulnerable to inflation surprises or a more vigilant Fed signal [2]. - The report anticipates that belly and long-end inflation will remain appealing if the positive growth trend continues [2]. - The Bank of Canada is expected to prioritize growth risks, with potential for further cuts if economic conditions worsen [2][19]. Europe - European core rates are stable, with limited signals from recent data for the ECB, which is expected to continue its cutting trajectory [11]. - The report suggests that sovereign credits like Bonos and BTPs may outperform core rates due to favorable ECB policies and macroeconomic performance in Spain and Italy [12]. - The report forecasts 10y Bund yields at 2.80% by the end of 2025, reflecting a stable outlook despite current market conditions [12]. Japan - The Bank of Japan's dovish tone and downgraded growth forecasts suggest skepticism about future rate hikes, with expectations pushed back to January 2026 [25]. - The report notes that the market is pricing in lower terminal rates, reflecting uncertainty about the BOJ's future actions [26]. Australia and New Zealand - The upcoming Australian election may influence fiscal and monetary policy, with potential stronger fiscal support if the incumbent Labor party remains in power [27]. - The report indicates that global growth risks may limit divergence between AUD and NZD rates [27]. Forecasts - The report provides a forecast for G10 10-year yields, with expectations for USD at 3.95% in 2Q25 and 4.00% in 4Q25, reflecting a cautious outlook on global economic conditions [31].

Investment Rating - The report raises the Southbound flow forecast from US$75 billion to US$110 billion for 2025, indicating a positive outlook for Southbound investments [7][35][41]. Core Insights - Emerging markets in Asia, excluding China, experienced strong foreign institutional investor (FII) inflows of US$2.8 billion week-over-week, primarily driven by Taiwan [6][44]. - In April, Korea led the regional foreign selling, while domestic institutional flows in India remained robust [7][8]. - Global equity mutual funds saw inflows of US$8 billion week-over-week, with significant outflows from US funds [6][10]. Summary by Sections Foreign Institutional Investor (FII) Flows - EM Asia ex-China markets saw FII buying of US$2.8 billion week-over-week, led by Taiwan (+US$1.7 billion) [6][44]. - Southbound flows recorded US$0.2 billion this week, totaling US$78 billion year-to-date [6][35]. - In April, Korea experienced significant FII selling, while India saw strong domestic institutional inflows [7][8]. Mutual Fund Performance - The largest 350 EM and Asian mutual funds rebounded, posting average returns of 1-4% year-to-date, with EM funds outperforming Asia funds by 3 percentage points [7][8]. - Only 20-40% of the largest Asian/EM funds outperformed their benchmarks in April, below the 10-year average of 55-65% [11][12]. Southbound Flows - Southbound flows have made the strongest start of a year in history, with US$78 billion year-to-date [7][35]. - The report highlights a significant increase in Southbound ownership in the Hong Kong market, indicating growing interest from mainland investors [37][41]. - The top buying stocks in Southbound flows included Meituan Dianping and Akeso, while Tencent and Alibaba saw significant selling [67][71].

Investment Rating - The report indicates a cautious outlook for the US economy, with a 12-month recession probability revised from 45% to 65% [3] Core Insights - The US is expected to experience weak growth of just 0.5% on a Q4/Q4 basis in 2025, influenced by significant trade policy uncertainties and potential tariff impacts [3] - In the Euro area, growth is projected at only 0.3% for 2025, with the European Central Bank expected to continue cutting rates [3] - China's growth forecast for 2025 has been downgraded to 4%, with aggressive fiscal and policy easing anticipated to cushion the impact of tariffs [3] Summary by Sections US Economics - The effective tariff rate is expected to rise by about 16 percentage points, with broad-based tariffs not effectively targeting industries that could boost domestic employment [5] - Historical data suggests that a 10 percentage point increase in tariffs raises employment in protected industries by 0.4%, but a 1 percentage point increase in costs lowers employment by 0.6% [5] - The report estimates that tariff protection will create a net drag of approximately 480,000 jobs in downstream industries [5] Europe Economics - The Q1 GDP tracking estimate for Europe has been boosted to +0.4%, driven by a rise in core retail sales [7] - UK pay growth was below expectations at 5.9% in February, with a stable unemployment rate of 4.4% [7] - Euro area final inflation for March showed a headline rate of 2.18% year-on-year, with core inflation at 2.43% [7][8] Asia/EM Economics - China's Q1 GDP growth was reported at 5.4% year-on-year, exceeding market expectations, with strong performance in industrial production and retail sales [9] - Despite high tariffs, US importers remain reliant on China for many goods, with 36% of US imports from China having over 70% reliance on Chinese supply [9] - The report notes that the USD-JPY exchange rate has implications for the Bank of Japan's policy, with the USDJPY dropping to 142 [11]

Investment Rating - The report has lowered the average 2025 net profit growth forecast for covered banks to -5%, reflecting a decrease of 1 percentage point from previous estimates [15]. Core Insights - Negative net profit growth in 1Q25 for large SOE banks and CMB has led to stock price declines, prompting a reassessment of profit forecasts and target prices [1]. - Despite negative net profit growth, banks may still attract long-term funds due to limited downside on dividend yields compared to government bond yields [2][3]. - The report emphasizes the increasing importance of net profit growth in 1Q25, as investors have heightened expectations for shareholder returns following two years of excess returns [3][4]. - The report indicates that banks are facing challenges in achieving positive net profit growth in 2025 due to lower-than-expected net interest income (NII) and loan growth [11][15]. Summary by Sections Net Profit Growth - The average net profit growth forecast for covered banks is now -5% for 2025, with small banks BONB and BONJ expected to achieve 7% growth [15]. - Most banks are still releasing provisions, but not sufficiently to drive positive profit growth, and the potential for further provision releases is limited [5][15]. Dividend Payout Ratios - Banks may need to increase their dividend payout ratios to maintain stable dividends per share (DPS) amidst negative EPS growth [22][30]. - The report suggests that banks have the capacity to increase dividends, but their willingness remains uncertain [22][26]. Loan Growth and NIM - Loan growth for major banks is projected to be lower than previously expected, with NIM also declining more than anticipated [11][13]. - The report notes that while credit growth is expected to accelerate, overall loan demand remains weak due to external factors such as tariffs [13][40]. Fee Income and Consumer Finance - Some banks have reported better-than-expected growth in fee income, driven by bancassurance and fund sales [33]. - A potential recovery in consumer finance is anticipated in the second half of 2025, influenced by low base effects and banks seeking new business opportunities [31][34]. Stock Selection and Recommendations - Among large and medium-sized banks, CMB is viewed as having the least EPS dilution and the lowest required increase in dividend payout ratio, making it more capable of maintaining stable DPS [41]. - BONB is favored for its high growth potential relative to larger banks, while BONJ is rated Neutral due to ongoing convertible bond conversion processes [41].

Investment Rating - The report maintains a "Buy" rating on Dabeinong (DBN) for biotech seeds and Muyuan Foods, driven by a sustainable margin outlook [3][58]. Core Insights - The higher tariffs imposed by China on US agricultural imports, particularly soybeans, are expected to add inflationary pressure on major grains, but the overall inflation impact may be mitigated by strong harvests in Brazil and soft domestic demand for animal protein [1][12]. - Biotech seed penetration in China is projected to increase significantly, with commercial planting expected to reach 90% of corn planting areas for the 25/26E season, up from 61% in the previous season [2]. - Dabeinong's market share in approved biotech seed varieties remains dominant at 60%, indicating strong competitive positioning in the market [2]. Summary by Sections Tariff Impact - The report discusses the historical context of tariffs, noting that a 135% tariff on US soybeans could lead to a wider pricing disparity compared to Brazilian soybeans, although this may be offset by alternative supply factors and weak domestic demand [12][11]. Biotech Seeds - Feedback from the industry indicates that biotech seed penetration is expected to reach 10% for the 25/26E planting season, a significant increase from 2% a year ago [2]. - The report highlights the positive feedback on trait payment terms, which could further enhance the adoption of biotech seeds [2]. Agricultural Coverage - The report provides a comprehensive overview of the agricultural sector, emphasizing the importance of tracking domestic animal protein supply and cost, as well as the supply/demand balance of major grains globally and in China [23]. - Key charts and data points are included to help investors gauge trends in protein consumption, crush margins, inventory, import, and pricing for major proteins [23].

Investment Rating - The report does not provide a specific investment rating for Espressif (688018.SS) as it is categorized as "Not Covered" [1]. Core Insights - Espressif is a local Wi-Fi chipset firm focusing on AIoT, energy, and industrial clients, leveraging RISC-V architecture for its products. The company is optimistic about growth in 2025, driven by product diversification and strong software capabilities [1][3][10]. - The company is expanding its product line to include Wi-Fi 7 and AI edge chipsets, aiming to capture a larger market share. A recent private placement plan was announced to fund this development [1][11]. - Espressif's products are primarily based on RISC-V architecture, which allows for lower royalty costs and in-house IP development. This aligns with a broader positive outlook on the RISC-V ecosystem in China [2][9]. Summary by Sections Company Overview - Espressif (688018.SS) is a fabless company providing Wi-Fi chipsets/modules for various applications, including consumer electronics and smart home solutions. The company integrates Bluetooth functionality and offers a comprehensive range of Wi-Fi SoC solutions [3][4]. Product Development and Market Outlook - The management is positive about the growth outlook for 2025, with expectations of a gross margin above 40% and plans to increase headcount by 10% to 15% for new product development [10]. - The company is focusing on upgrading its product offerings towards Wi-Fi 7, which features high throughput and low latency, suitable for high-end applications like AR/VR and HD video [11]. Competitive Positioning - Espressif's RISC-V based architecture provides a competitive edge with a broad product line that offers high performance and a favorable price-to-performance ratio. The company is also expanding into high-end solutions [2][4].

Investment Rating - The report indicates a positive outlook for the retail and consumer sector, suggesting that consumption has bottomed out and is expected to continue growing, particularly during holiday periods [1][10]. Core Insights - Retail sales growth during the Labor Day holiday was better than expected, with key retail and restaurant enterprises reporting a year-over-year growth of 6.3%, up from 4.1% during the Chinese New Year holiday [1][10]. - Tourism sales also showed strong performance, with an 8% year-over-year increase, reaching 136% of pre-COVID levels, supported by a 6.4% increase in tourism traffic [1][10]. - Spending patterns indicate a rational approach from consumers, with per capita tourism spending growing by only 1.5% year-over-year, still below pre-COVID levels [3][10]. Summary by Category Retail and Catering - Home appliances, auto, and telecom equipment saw significant sales growth, with key enterprises reporting increases of 15.5%, 13.7%, and 10.5% respectively [2][23]. - Catering services also performed well, with an 8.7% increase in sales, particularly benefiting from strong traffic and consumer willingness to pay for experiences [2][22]. Tourism - Domestic tourism sales grew by 8% year-over-year, with total tourism sales recovering to 123% of pre-COVID levels, driven by increased traffic [10][11]. - Outbound travel showed solid momentum, with a 21% year-over-year increase, particularly to Hong Kong and Macau [11][10]. Regional Performance - Consumer spending growth was balanced across different tiers of cities, with key tourism cities and lower-tier cities benefiting from increased traffic [9][26]. - Major cities like Shanghai and Beijing outpaced the national average in consumption growth, aided by domestic tourism and visa-free policies [28][26]. Specific Categories - Jewelry sales improved due to better sentiment around gold prices, with notable growth from brands like Chow Tai Fook [24][19]. - The box office experienced a significant decline of 51% year-over-year, attributed to a lack of blockbuster films [25][10].

Investment Rating - The report does not explicitly provide an investment rating for the industry or companies discussed Core Insights - The report highlights three main themes from the 1Q 2025 earnings calls: tariffs, consumer sentiment, and AI impact on businesses [1] Theme 1: Tariffs - 89% of S&P 500 companies mentioned "tariffs" during their earnings calls, indicating significant concern over trade policy uncertainty [3][8] - Companies are employing various strategies to mitigate tariff impacts, including supply chain adjustments and passing costs to consumers [3][4] - 28% of S&P 500 companies quantified the impact of tariffs, with some estimating cost increases of 6% to 8% [21][31] Theme 2: The Consumer - There is a noted decline in consumer sentiment, with both top and bottom income terciles reporting lower confidence levels than during COVID [9][10] - Despite negative sentiment, some companies report that consumer spending remains strong, while others see signs of weakness in discretionary spending [47][49] - Revisions to 2025 earnings estimates for consumer sectors show negative adjustments of -8% for Consumer Discretionary and -4% for Consumer Staples [10][12] Theme 3: AI - Companies express enthusiasm for AI, citing cost reductions and productivity improvements, although mentions of AI in earnings calls slightly decreased from 48% to 44% [14][20] - Major tech firms are investing heavily in AI, with significant capital expenditures planned to support growth in AI services [15][67] - AI is seen as a long-term growth driver, with companies reporting increased demand for AI-enabled products and services [15][78]

Investment Rating - The report indicates a positive outlook for the US-China trade relations, expecting a reduction in tariffs from approximately 160% to around 60% soon, which could enhance investment sentiment in related sectors [1][3]. Core Insights - The resilience in hard economic data has reassured investors, with improved employment reports and jobless claims indicating stability in the labor market, contributing to a significant easing of financial conditions [4][9]. - Despite the positive indicators, the report maintains a 12-month recession risk estimate of 45%, highlighting potential tariff increases in other sectors and the lagging nature of hard data during downturns [9][12]. - The outlook for monetary policy remains uncertain, with expectations of further rate cuts from the Federal Reserve and the European Central Bank, reflecting a dovish stance amid economic challenges [15][19]. Summary by Sections US-China Trade Relations - The Trump administration has softened aggressive tariff policies, with expectations of a significant reduction in tariffs on both sides, which could lead to improved trade dynamics [1][3]. Economic Resilience - Recent employment data and jobless claims suggest continued resilience in the labor market, contributing to a sharp easing of financial conditions, with a projected peak financial conditions drag on US GDP growth decreasing from 1.0 percentage points to 0.2 percentage points [4][8]. Recession Risks - The report highlights a 45% recession risk over the next 12 months, with concerns about potential tariff increases in various sectors and the impact of pre-buying on economic data [9][12]. Monetary Policy Outlook - The report anticipates further rate cuts from the Federal Reserve and the European Central Bank, with a dovish outlook for monetary policy in response to economic conditions [15][19]. Market Strategy - The report advises caution for investors, suggesting a weaker dollar and higher gold prices as key themes, while being bullish on UK rates, copper, and US natural gas, but bearish on oil [26].