UBS(US:UBS) Zhi Tong Cai Jing·2025-05-14 01:30Group 1 - UBS strategists predict that A-shares are likely to regain upward momentum, recommending tactical increases in growth stocks to enhance portfolio resilience [1] - The US and China have jointly announced the cancellation of 91% of cumulative tariffs, with both countries suspending 24% of reciprocal tariffs, establishing a mechanism for ongoing trade negotiations [1] - UBS estimates that the weighted average tariff rate imposed by the US on Chinese goods is approximately 43.5%, with non-financial A-share companies expected to have an overseas revenue share of 14.3% in 2024 [1] Group 2 - UBS forecasts a 6% year-on-year growth in earnings per share (EPS) for the CSI 300 index by 2025, assuming tariffs remain unchanged [3] - In the first quarter of 2025, A-share earnings are expected to grow by 3.5% year-on-year, with non-financial A-share earnings increasing by 4.2%, aligning with the positive industrial profit data released by the National Bureau of Statistics [3] Group 3 - UBS anticipates a sequential recovery in A-share earnings this year due to a low base and potential policy support, with a significant inflow of long-term capital likely to reduce equity risk premiums [6] - The valuation of A-shares remains significantly lower than that of emerging markets, suggesting continued net inflows from global capital [6] Group 4 - UBS advises tactical increases in growth stocks, small-cap stocks, and high beta sectors, particularly in technology, media, and telecommunications (TMT), which may benefit from domestic policy support [7] - The performance of small-cap stocks is expected to outperform large-cap stocks due to their higher overseas revenue share in a recovering market [7] Group 5 - The upcoming 90-day pause in trade negotiations between the US and China introduces significant uncertainty, with the potential for the state to increase stock holdings to stabilize the market [8] - The Central Huijin Investment has announced its role as a stabilizing fund in the capital market, indicating a willingness to support stock prices if necessary [8] Group 6 - Since April 7, trading volumes of various A-share exchange-traded funds (ETFs) have surged significantly, indicating increased market activity [9] - The structure of ETF holdings by the state is more balanced, which is expected to enhance liquidity for small and mid-cap stocks [10] - UBS estimates that Central Huijin's net investments in A-share ETFs for the first three quarters of 2024 will total 771.8 billion yuan, with state-owned entities holding at least 1.24 trillion yuan in stocks, accounting for 7.7% of the free float market cap [10]