Investment Rating - The report maintains an "Attractive" rating for the semiconductor industry, with a cautious outlook on specific segments [1]. Core Insights - Investor expectations are focused on potential new semiconductor export controls, with a bullish view on the semiconductor sector despite uncertainties [1][2]. - NVIDIA's roadmap changes are not expected to significantly impact revenue trends, which remain strong [2]. - August Semiconductor Industry Association (SIA) billings data exceeded expectations, with a month-over-month sales increase of 15.4% [2][6]. Summary by Sections Industry Overview - The semiconductor industry is experiencing a bottoming process, with expectations of returning to growth in CY24 compared to CY23 [7]. - Strong demand in data center markets contrasts with weakness in other sectors, leading to a cautious outlook for the remainder of the year [6][7]. Market Performance - August SIA data showed sales growth across various segments, with the Americas and China leading the way [2][6]. - DRAM sales increased by 66.2% month-over-month, while NAND sales rose by 38.3% [5][10]. Company-Specific Insights - NVIDIA remains a top pick in the semiconductor space, with anticipated strong business trends through CY25 [2]. - Adjustments to NVIDIA's product roadmap are seen as inconsequential, aligning production with customer demand [2]. Financial Projections - The forecast for CY24 growth is set at 19.4%, with a slight increase from previous estimates [6]. - For CY25, growth is projected at 8.2%, reflecting a cautious but optimistic outlook [6].

M Idea China Industrials | Asia Pacific October 7, 2024 08:00 PM GMT 3Q24 Preview – Transportation Equipment We expect railway equipment earnings to be in line with consensus, with steady revenue and NP growth from ongoing MU delivery and solid maintenance. HDT players' results are likely to be weak, with muted industry demand and margin pressure from product mix, but should improve q-q in 4Q. Heavy-duty trucks Weak 3Q earnings given domestic demand softness and fading LNG HDT momentum: 3Q HDT sales turned ...

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Investment Rating - The report maintains an "Overweight" rating for NVIDIA Corp, indicating a positive outlook for the stock [1][9]. Core Insights - The management emphasizes that the industry is still in the early stages of a long-term artificial intelligence investment cycle, with complex reasoning capabilities expected to grow exponentially, creating new opportunities [1][2]. - NVIDIA's Blackwell system is highlighted as the best solution to meet the challenges posed by increasing computational demands, with strong short-term capacity growth anticipated [1][7]. - The company is expected to achieve significant revenue growth in 2025, driven by advancements in AI and machine learning technologies [2][9]. Summary by Sections Financial Performance - NVIDIA's projected revenue for 2024 is $60.92 billion, with an expected increase to $123.99 billion in 2025 and $166.93 billion in 2026 [13]. - The gross margin is forecasted to be 73.6% in 2024, increasing to 75.4% in 2025 [13]. Market Position - NVIDIA is positioned as a leader in the AI market, with its upcoming Blackwell products expected to further solidify its competitive advantage [8][12]. - The company is likely to capture a significant share of the AI processor market by 2025, as demand for customized silicon chips is rapidly increasing [7][8]. Product Development - The Blackwell architecture is designed to handle more complex reasoning tasks, which will require advanced hardware investments [7][8]. - NVIDIA's management is confident that the initial production issues with Blackwell have been resolved, and they expect substantial revenue from this product line in the upcoming quarters [8][9]. Long-term Vision - NVIDIA envisions a future where every company employs numerous "digital AI workers" to perform complex tasks, indicating a transformative shift in how businesses operate [7][8]. - The report suggests that the evolution of AI will necessitate increasingly sophisticated reasoning capabilities, driving demand for NVIDIA's advanced processing solutions [7][8].

Investment Rating - The report assigns an "Overweight" rating to NVIDIA Corp. and identifies it as a "Top Pick" in the semiconductor industry with a price target of $150.00 [4][13][14]. Core Insights - The management of NVIDIA expresses high confidence in long-term growth opportunities driven by the increasing complexity of AI inference, particularly with the introduction of "long thinking" models that require more computational power [2][3][7]. - The Blackwell systems (NVL36/72) are highlighted as the best solutions for addressing the challenges posed by complex inference, providing a competitive edge over merchant and custom alternatives [2][3]. - NVIDIA is positioned to benefit significantly from the ongoing AI investment cycle, with expectations of strong revenue growth in 2025 and beyond [3][11]. Summary by Sections Financial Metrics - Current market capitalization is approximately $3.33 billion, with a recent stock price of $132.65 [4]. - Earnings per share (EPS) estimates for fiscal years 2024 to 2027 are projected at $1.30, $2.80, $3.78, and $4.13 respectively, with a price-to-earnings (P/E) ratio decreasing from 51.0 in 2024 to 34.1 in 2027 [4][20]. Market Dynamics - The report notes that the high cost of scaling training clusters and the explosive adoption of high-end GPUs in generative AI inference have positively influenced NVIDIA's market position [3][11]. - The anticipated ramp-up of Blackwell systems is expected to drive strong demand, with the product sold out for the next 12 months [2][11]. Long-term Vision - NVIDIA envisions a future where enterprises will employ numerous "digital AI employees" capable of executing complex tasks, indicating a significant shift in workforce dynamics [9][11]. - The report emphasizes that the complexity of inference will necessitate substantial investments in hardware, positioning NVIDIA's Blackwell systems as critical to meeting these new demands [9][11]. Competitive Positioning - NVIDIA's full-stack approach to AI solutions is seen as a key differentiator, allowing the company to maintain a considerable lead in the market [3][11]. - The report suggests that NVIDIA is likely to gain market share in AI processors as demand for custom silicon increases among major users [11][17].

Investment Rating - The report maintains a maximum overweight rating for India due to its low beta coefficient and limited global risk exposure, while Australia has been upgraded to overweight as a defensive investment. China's position has been reduced, but investors are advised not to chase short-term rebounds without clear fiscal policy signals [1][2][3]. Core Insights - The current market environment in Asia and emerging markets is characterized by high valuations, geopolitical risks, policy uncertainty, and macroeconomic factors, prompting investors to adopt a defensive investment strategy [1][2]. - The report highlights that current Asian market valuations are nearly at the peak levels of the 2021 cycle, presenting unique challenges compared to previous cycles where economic resilience was observed without such high valuations [1][3]. - Geopolitical tensions, particularly between Iran and Israel, pose significant risks to oil prices, which could lead to substantial price volatility despite a potential price floor of $60-70 per barrel for Brent crude due to oversupply [1][4]. Summary by Sections Market Environment - The report indicates that the market environment is complex, influenced by geopolitical risks, policy uncertainty, and macroeconomic factors, with key issues including the upcoming U.S. elections and the Fed's interest rate decisions [2][3]. Valuation Analysis - Current valuations in Asian markets are comparable to the 2021 cycle peak, with historical comparisons showing significantly higher valuations than previous cycles, which raises concerns about economic recovery potential [3]. Oil Price Risks - Oil prices are under significant risk due to geopolitical tensions, with potential for large fluctuations beyond the established price range, impacting global supply dynamics [4][5]. Investment Opportunities - Brazil and South Africa are highlighted as having potential investment opportunities due to low interest rates and structural benefits, while caution is advised for Asia and Europe given the prevailing market conditions [1][2]. U.S. Election Impact - The upcoming U.S. elections are expected to significantly influence policy directions, particularly regarding fiscal measures, with potential implications for global trade and specific industries [7][9][10]. Chinese Market Outlook - The report notes that China's market valuation aligns with global trends, but maintaining this position may be challenging due to fiscal policy requirements and geopolitical uncertainties [6][30]. Real Estate Market - The real estate market is a focal point for policymakers, with recent measures indicating a significant shift in approach to stabilize the market and stimulate consumption [19][20]. Monitoring Indicators - Key indicators to monitor include the ten-year Chinese government bond yield, which reflects investor confidence and the potential for a return to a healthy inflation trajectory [31][32]. Conclusion - The report emphasizes the importance of fiscal stimulus measures in driving the Chinese stock market out of deflation and back to a trajectory of profit growth, while also highlighting the need for vigilance regarding domestic policies and international developments [32][33].

M Update Morgan Stanley Asia Limited+ Laura Wang Equity Strategist Laura.Wang@morganstanley.com +852 2848-6853 October 8, 2024 04:30 AM GMT | --- | --- | |---------------------------------------|-------| | | | | | | | China Equity Strategy \| Asia Pacific | | | Market Sentiment Down on | | | Limited Clarity from NDRC | | Major momentum reversal in China equity market post the NDRC conference: The announced fiscal measures fell short of market expectations, in particular failed to provide more detailed actio ...

Investment Rating - The report does not explicitly provide an investment rating for the industry [1]. Core Insights - The fiscal package from the Chinese government is expected to be limited, with a focus on infrastructure investment rather than direct consumer demand stimulus. The Ministry of Finance may provide further details on local debt resolution and financial risk prevention in the coming weeks [1]. - Growth expectations for the Chinese economy are modest, with a projected sequential growth improvement to 5% QoQ SAAR in 4Q24-1Q25, up from 3% in 2Q-3Q24. However, sustainable reflation requires a larger fiscal package, estimated at around 10 trillion yuan, focusing on consumption, debt restructuring, and housing [1]. Summary by Sections Fiscal Package and Demand Stimulus - The report indicates that the fiscal package is unlikely to be substantial, with the consumption portion expected to undershoot. The government plans to front-load 200 billion yuan for infrastructure investment and implement a consumer goods trade-in program without specifying additional funding [1]. Growth Projections - The report anticipates a modest sequential growth improvement in the Chinese economy, projecting a rise to 5% QoQ SAAR in 4Q24-1Q25 from 3% in 2Q-3Q24. It emphasizes that meaningful reflation will require a larger fiscal package [1].

Investment Rating - The investment rating for Bajaj Finance Ltd is Overweight (OW) [4][9]. Core Insights - The report emphasizes the growth potential in consumer finance in India, with Bajaj Finance aiming to capture an increasing market share through technology and compliance [2]. - Over the past six years, Bajaj Finance has added 23.6 million new-to-credit customers, indicating significant growth opportunities [2]. - The company has a strong focus on talent management and leadership transitions, with a low attrition rate of 17% compared to peers at over 25% [2]. Summary by Sections Company Overview - Bajaj Finance operates a comprehensive financial services platform, including housing finance, insurance, mutual funds, and securities [2]. - The company is optimistic about the medium-term consumer finance opportunities despite current market cycles [2]. Strategic Focus - The group leverages technology and compliance to gain a competitive edge, with a structured approach to capital allocation and risk management [2]. - Leadership transitions are planned to maximize impact, ensuring minimal disruption and maintaining a strong talent pool [2]. Market Position - Bajaj Finance has historically focused on consumer-oriented businesses, with a strategy to adapt to market conditions using data collection and AI [2]. - The regulatory environment has been favorable, allowing the company to build competitive advantages [2].

Investment Rating - The report does not explicitly provide an investment rating for the currencies analyzed, but it discusses potential bullish and bearish trends for various currency pairs, indicating a focus on pro-cyclical trades and market recovery [1][3][6]. Core Insights - The report emphasizes the importance of key resistance and support levels for various currency pairs, suggesting that sustained movements above or below these levels could indicate significant market trends [1][3][6][9][11][13]. Summary by Currency Pair USD/CNH - The USD/CNH pair is currently in a critical bifurcation zone between 7.078 and 7.108, with a tactical rebound from this support potentially favoring a bullish trend [1][5]. - A sustained break below 7.075 would reinforce a bullish macro outlook, while a move above 7.1367 could target higher resistance levels [3][5]. USD/CLP - The USD/CLP pair is also at a key medium-term bifurcation zone, with resistance observed between 928.33 and 939.42. A bearish reversal here could maintain a longer-term cycle top structure [6]. - Key support levels are identified at 882.65-883.27, with a move below indicating a significant pro-cyclical rotation [6]. AUD/USD - The AUD/USD pair has recently whipsawed back into the 2023-2024 range after a brief breakout attempt. Holding above the 0.6716-0.6745 support could keep the pro-cyclical trend intact [8]. - A break above 0.68-0.6901 would indicate a base pattern breakout, potentially leading to a rally acceleration [8]. EUR/USD - The EUR/USD pair has fallen from the 1.125-1.1294 resistance zone to test the 1.093-1.0981 support zone. A sustained break below 1.09 could lead to significant downside [9]. - The report suggests that the pair may stabilize at the current support level, with the fourth quarter being critical for its outlook [9]. GBP/USD - The GBP/USD pair is approaching expected support near 1.30, with a bounce anticipated from this level. A break below 1.2827-1.2928 would indicate further downside potential [11][12]. - Tactical resistance is noted at 1.3236, with the pair's recent movements lacking clear evidence of a trend reversal [11]. USD/JPY - The USD/JPY pair is extending its bounce from key support near 140, with resistance expected near the 150-151 range. The report indicates that this could form the right shoulder of a potential multi-quarter cycle-top pattern [13]. - Tactical support is identified at 146.495-147.17, with a rally expected to fade near the key resistance levels [13].