汇丰：中国策略追踪-增长趋弱，政策支持加强

Investment Rating - The report maintains a positive outlook on the Chinese equity market, anticipating more policy support to stimulate growth [3][7]. Core Insights - Economic growth in April 2025 showed signs of weakness across various sectors, with retail sales growing by 5.1% year-on-year, industrial production at 6.1% year-on-year, and fixed asset investment (FAI) at 3.5% year-on-year [3][7]. - The property sector is experiencing a downturn, with house sales in 30 major cities weakening since late March and monthly sales by the top 100 developers declining by 8.8% year-on-year in April [3][91]. - Policy support is expected to increase, particularly in social security and consumption, during the upcoming July Politburo meeting [3][7]. Data Highlights - Labour Day holiday tourism traffic and revenue reached 136% and 123% of the 2019 levels, respectively, indicating a 10% decrease in per capita spending [4][32]. - New mutual fund issuance has seen a recovery, up 88% year-on-year [4][45]. - The southbound channel recorded net inflows of HKD603.9 billion year-to-date, although trading has been sideways since mid-April [4][59]. - Foreign fund inflows to mainland China equities were lukewarm in May 2025 [4][57]. - NAND flash and DRAM prices have improved since mid-April [4][79]. - Domestic game license issuance remained high at 118 in April 2025 [4][85]. - Air conditioner exports declined by 0.2% year-on-year in April, marking the first drop since March 2024, while domestic sales grew by 3.7% year-on-year [4][83]. Sector Allocations - The report indicates sector allocations with a focus on growth sectors such as Information Technology, Consumer Discretionary, and Healthcare, all rated as overweight [10]. - The report highlights that the Information Technology sector has a weight of 15.6% and is expected to perform positively despite recent negative earnings revisions [10]. - The Real Estate sector is underweight, with a significant decline in performance noted at -7.0% [10]. Market Focus - The report notes that the overall market is trading at a 14.2% discount compared to emerging markets, with the FTSE China trading at a forward PE of 11.4x versus 13.3x for FTSE EM [11][12]. - The consensus earnings for CSI800 constituents have been revised down by 5.1% year-to-date [21]. Macro Focus - The report discusses the resilience of the US economy, with an unemployment rate stable at 4.2% and inflation below consensus at 2.3% year-on-year [5][7]. - The Federal Reserve is expected to make adjustments to its policy-setting framework, which may influence future Fed policy [5][7]. Liquidity Focus - The margin financing balance stabilized at approximately RMB1.8 trillion in May 2025 [48]. - The turnover of stock ETFs as a percentage of A-share turnover dropped to 6.3% [51]. Growth Sectors - The penetration of new energy vehicles (NEVs) in China reached 51.5%, an increase of 7.4 percentage points year-on-year [68]. - The report notes that the price of lithium iron phosphate (LFP) batteries has edged lower recently [70]. Value Sectors - Monthly sales from the top 100 property developers amounted to RMB284.7 billion in April 2025, down 8.8% year-on-year [91].