Investment Rating - The industry view is rated as Attractive [2]. Core Insights - Earnings for banks remained largely stable in 2Q24, with notable divergences among state-owned enterprises (SOE) banks, particularly with ABC and BOC showing positive revenue growth while ICBC and BoCom exhibited weaker trends [2][6]. - The net interest margin (NIM) remained stable on average, with a modest decline of 2 basis points in 2Q24, supported by lower deposit and funding costs [2][6]. - Fee income pressure persisted, with a double-digit decline reported across most banks, although investment gains helped offset some losses [2][8]. - There was a wider divergence in revenue growth, with Ningbo and Hangzhou banks leading with 7-9% year-on-year growth, while banks like PAB and ICBC experienced notable revenue declines [2][10]. Summary by Sections Earnings Performance - The average profit growth for covered banks improved to 4.9% year-on-year in 2Q24, up from 1.5% in 1Q24, driven by SPDB and CRCB's strong performance [4][6]. - ABC reported a profit rebound of 6.2% year-on-year, while BoCom's profit decreased by 5.2% [5][6]. Net Interest Margin (NIM) - NIM for banks showed a slight average decline of 2 basis points, with CITIC Bank experiencing a notable rebound due to rational loan pricing and deposit cost cuts [2][7]. - ICBC's NIM fell to 1.38%, the lowest among the big four banks, reflecting a significant decline from the previous year [7][16]. Fee Income - Fee income across the covered banks declined by an average of 12.6% year-on-year in 2Q24, with most SOE banks experiencing accelerated declines [8][17]. - Investment income helped stabilize non-interest income, which remained flat year-on-year despite the fee income pressure [8][17]. Revenue Growth - Revenue trends showed a decline of 1.2% year-on-year on average, with significant variations among banks; ABC and BOC achieved positive revenue growth while ICBC's revenue fell by 8.8% [10][12]. - Ningbo and Hangzhou banks reported revenue growth of 8.6% and 7.3% year-on-year, respectively, supported by stable NIM and balance sheet growth [10][12]. Cost Management and PPOP - The average cost-income ratio rose by 60 basis points year-on-year to 32.3%, with SOE banks experiencing a more significant increase [10][11]. - Ningbo reported the strongest PPOP growth at 11.7% year-on-year, while ICBC and BoCom faced sharper declines in PPOP due to weaker revenue [11][12].

J P M O R G A N Global Quantitative & Derivatives Strategy 27 August 2024 US Equity Financing and AIR TRF Monitor Aug 27, 2024 • Short-dated implied financing rates increased on the S&P 500, Nasdaq 100, and Russell 2000 w/w, leading to a flattening of the funding term structure. • Pricing on the S&P 500 AIR TRFs increased 1 bp on the Sep'24 contract, 4 bps on the Dec'24 contract, 3 bps on the Mar'25 contract, and were little changed across the rest of the curve w/w. • Volumes on S&P 500 AIR TRFs totaled ~$8 ...

Investment Rating - The report indicates a positive investment rating for Financials, while Semiconductors and Semiconductor Equipment have been trimmed to an overweight (OW) position of +3.0% [1][3]. Core Insights - Active GEM funds experienced a significant outflow of US$2.2 billion, contrasting with a US$254 million inflow into GEM passive products [1]. - India has surpassed China as the largest market in active portfolios, while China has become the largest underweight (UW) market, replacing Saudi Arabia [2]. - The most bought stocks include Hon Hai Precision, Meituan, and ITC, while the most sold stocks are TSMC, Alibaba, and SK Hynix [2]. Summary by Sections Active Manager Positioning - Active managers have reduced their overweight positions in Semiconductors and Semiconductor Equipment, while increasing their exposure to Financials [2][3]. - Brazil is now the largest overweight market, with funds reducing exposure to Taiwan, China, and India, as well as Mexico [3]. Sector Analysis - In Japan, active managers have added to Materials, which is now the most crowded sector, while trimming their overweight positions in Tech Hardware & Equipment [2]. - Hedge fund managers have covered shorts in Energy and Real Estate, while increasing shorts in Communication Services and Information Technology [4]. Top Holdings - The top holdings among long-only EM active managers include Taiwan Semiconductor Manufacturing (11.4%), Samsung Electronics (5.7%), and Tencent Holdings (5.1%) [6]. - Notable changes in QTD include a decrease in active weight for TSMC and Alibaba, while Hon Hai Precision has seen an increase [6].

Investment Rating - The report assigns an "In-Line" industry view for the Hong Kong property sector [1]. Core Insights - July 2024 retail sales in Hong Kong declined by 12% year-over-year, which is worse than expected, leading to a revised forecast for 2024 retail sales to a decline of 9% from a previous estimate of 5% [1]. - The report highlights that stocks with retail exposure, such as Wharf REIC, Link REIT, and Hysan, have underperformed the Hang Seng Index by 20-24 percentage points year-to-date [1]. - The report favors residential developers over retail and office landlords, with a preference for Wharf REIC and Link REIT among retail landlords [1]. - The report notes that luxury retail sales dropped significantly, with a 25% year-over-year decline in July 2024, and a 15% drop year-to-date [1]. - Online retail sales grew by 1% year-over-year in July 2024, accounting for 7.8% of total retail sales [1]. Summary by Sections Retail Sales Performance - July 2024 total retail sales were HK$29.1 billion, marking a 12% year-over-year decline and the lowest dollar amount since the full border reopening [1]. - Major categories such as luxury goods, department stores, and clothing/footwear experienced significant declines, with luxury sales down 25% year-over-year [1]. Stock Recommendations - The report recommends Wharf REIC and Link REIT with an "Overweight" rating, while Hysan is rated "Equal-weight" due to slowing retail momentum and high office exposure [1]. - The report anticipates that potential upcoming US rate cuts could widen the dividend yield spread, positively impacting earnings per share (EPS) and dividends per share (DPS) for these stocks [1]. Visitor Trends - Chinese visitor arrivals increased to 78% of 2018 levels in August 2024, but local spending per capita remains weak, affecting overall retail performance [1].

Deutsche Bank Research 7T2se3r0Ot6kwoPa Asia Economics Asia Week Ahead Date 2 September 2024 What you need to know: 2 - 6 Sept | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------| | | Juliana Lee | | Week ahead | Chief Economist | | We expect BNM to remain on the sidelines as growth surprised to the upside, and | +65-6423-5203 | | inflation is likel ...

ab 28 August 2024 Global Research and Evidence Lab China Economic Perspectives Home Destocking Debate and Property Forecast Downgrade Economics China Where are we now in the property downturn? China's property activities have not bottomed since the unprecedented sharp downturn in 2021. The decline in urban housing prices has accelerated since H2 2023 amid elevated inventory pressure, weighing on household home purchase intention, consumption confidence and local government finances. China has eased property ...

Investment Rating - The report indicates a neutral investment rating with the BofA Bull & Bear Indicator at 6.2, suggesting a balanced market sentiment [29]. Core Insights - The report highlights a structural shift back to a 5% inflation environment, driven by factors such as globalization reversal, low debt, and demographic changes, indicating the beginning of a commodity bull market [3][10]. - It notes that China is increasingly relying on exports as domestic consumption slows, with retail sales growing only 3% annually since 2020 compared to 13% in the previous decade [3][10]. - The report emphasizes the importance of monitoring US hiring trends, as historical data shows that a decline in private sector job share below 40% often precedes a recession [3][4]. Summary by Sections Market Performance - Year-to-date performance shows gold at 22.4%, stocks at 15.4%, and cryptocurrencies at 14.3%, with cash and government bonds yielding minimal returns [2]. - The report notes significant inflows into cash ($24.5 billion) and bonds ($20.7 billion), while equities saw inflows of $13.7 billion [6][18]. Economic Indicators - The report suggests that if the ISM manufacturing index exceeds 49, it could lead to a rise in long-term bond yields, indicating better opportunities in Q4 [2][8]. - The ratio of new orders to inventories is highlighted as a leading indicator for ISM manufacturing PMI, with expectations of an ISM reading of 52 by October 2024 [8][14]. Sector Analysis - The report indicates that the financial sector experienced the largest inflow in six weeks, while utilities faced the largest outflow in ten weeks [7][18]. - It also notes that BofA private clients are reallocating their investments, with significant purchases in REITs and financials while trimming positions in T-bills [7][22]. Global Trade Dynamics - China’s GDP growth is reported at 5%, but domestic growth is sluggish, with consumer confidence at all-time lows [10]. - The report discusses the impact of trade restrictions on global imports, particularly in key industries like electric vehicles and steel, which could limit deflationary pressures [3][10]. Commodity Outlook - The report asserts that commodities are expected to outperform bonds in the coming years, with total returns for commodities significantly higher than those for long-term U.S. Treasuries over the past four years [10][26]. - It emphasizes that the current commodity bull market is just beginning, with annualized returns projected between 10-14% [10].

Investment Rating - The report maintains a positive outlook on key themes, particularly Obesity, AI, and Defence, indicating strong fundamentals and potential for continued growth [3][7]. Core Insights - The report emphasizes the importance of not selling secular themes too early, as they have historically delivered significant returns, averaging 66% in their first year and 17% in the second year [3]. - Among the leading themes, Obesity is highlighted as the strongest performer, with AI and Defence also showing promising fundamentals that justify their valuations [3][7]. - The analysis suggests that thematic stocks, particularly in Obesity, AI, and Defence, are experiencing earnings upgrades, which supports their current valuations [7]. Thematic Performance - The report categorizes thematic performance into three major themes: Tech Diffusion, Decarbonisation, and Longevity, aligning them with MSCI's thematic indices for better tracking [5]. - Obesity thematic stocks, led by companies like Novo and Lilly, continue to see upgrades, justifying their re-ratings over the past 24 months [8]. - AI and Robotics have seen significant EBITDA revisions of over 10% year-to-date, indicating strong performance and a re-rating close to 15% [8]. - Defence and Security have experienced modest re-ratings, with Defence showing greater earnings upgrades compared to Security, particularly in Europe [8]. Stock Selection - The report identifies 50 stocks globally that are included in multiple MSCI thematic indices, which have collectively outperformed the S&P 500 by over four times in the past decade [12]. - Multi-theme exposed stocks are considered reliable options for investors looking to outperform the market [12]. Market Conditions - The report notes that while China Tech is not a primary theme, it is experiencing 10% sales growth, suggesting a potential for higher valuation multiples [11]. - The analysis indicates that national budgets for Defence need to rise, and institutional investor positioning remains thin for key companies like Rheinmetall in Europe [7].

Industry Investment Rating - The report highlights a significant pivot in venture funding from blockchain protocols to AI start-ups, with blockchain funding down 75% while AI funding has doubled from 2022 lows [6][7] Core Report Insights - Bitcoin's price is 6% below its 2021 high and 15% below its all-time high, yet venture funding for blockchain protocols has dropped by 75% [6] - AI start-up funding now constitutes over 40% of all venture/growth funding, indicating a strong shift in investor focus [8] - AI funding has a stronger correlation to Bitcoin prices than blockchain funding, a trend only seen once before in 2020 [8] Blockchain Industry Analysis - Blockchain faces challenges with product-market fit and user engagement, with venture-backed investments unlikely to return significant funds compared to previous cycles [2] - Institutional interest in blockchain, driven by ETFs and the recent halving, has supported prices but not on-chain activity levels [6] AI Industry Analysis - AI start-ups have seen better adoption statistics compared to blockchain, but exit challenges remain in the private market [7] - AI funding has surged, with deal flow dominating other verticals, including blockchain-focused companies [8] Crypto Mining to AI Data Center Conversion - There is a growing opportunity for Bitcoin miners to convert mining facilities into AI data centers, with potential valuations up to $10/watt for powered shell conversions [11] - The conversion of a 150 MW crypto facility to an AI data center could yield significant financial benefits, with an indicative enterprise value of $411 million [13] Venture Funding Trends - Venture funding for AI start-ups has doubled from 2022 lows, aligning with the stock performance of key listed AI companies [7] - AI funding now makes up over 40% of all venture/growth funding, significantly outpacing other sectors [8] Market Performance and Correlations - AI funding shows a stronger correlation to Bitcoin prices than blockchain funding, a trend not seen since 2020 [8] - The report includes detailed correlation data between Bitcoin prices and AI/ML capital invested from 2014 to 2024 [9] Largest Deals and Funding Rounds - The report lists significant VC and PE deals, including Grafana Labs' $328 million 6th round and Borealis Biosciences' $150 million 1st round [17][18] - Notable AI-related deals include Story Protocol's $83 million 3rd round and Slingshot AI's $30 million 2nd round [17]

Investment Rating - The report indicates a positive outlook for the U.S. economy, with expectations of a 50 basis point rate cut by the Federal Reserve in September, contingent on upcoming employment data [7][8]. Core Insights - The U.S. economy is showing signs of robust consumer spending, with real consumer spending increasing by 0.4% in July and an upward revision of 2Q GDP growth to 3.0% from 2.8% [3][4]. - Business spending remains cautious, with nominal shipments of nondefense capital goods declining for three consecutive months, indicating a potential slowdown in business investment [4][5]. - The core PCE price index, the Fed's preferred inflation measure, rose only 0.16% month-over-month in July, suggesting moderating inflation risks [2][9]. - The personal saving rate has dropped to 2.9%, nearing post-COVID lows, raising concerns about future consumer spending sustainability [9][11]. - The labor market shows signs of cooling, with payroll gains expected to be modest at 150,000 for August, maintaining the unemployment rate at 4.3% [6][41]. Economic Growth and Consumer Spending - The report revises the 3Q GDP growth estimate to 1.5%, up from 1.3%, reflecting stronger consumer spending forecasts [3]. - Consumer confidence has improved slightly, with the Conference Board index rising to 103.3 in August from 101.9 in July [11][50]. Business Investment and Employment - Equipment spending forecast for 3Q has been raised to 5.0% from 1.0%, driven by strong aircraft shipments and capital goods imports [5]. - Business sentiment remains cautious, as indicated by downbeat regional Fed surveys, suggesting potential challenges ahead for business investment [4][6]. Housing Market - Housing data remains weak, with pending home sales declining 5.5% month-over-month in July, reaching an all-time low [11][60]. - The report anticipates a significant drop in real residential investment for 3Q, revised down to -10% from -5% [12]. Labor Market Dynamics - The labor market differential from the consumer confidence survey has decreased, indicating a growing perception of job scarcity [45]. - Job openings in the JOLTS report are expected to remain stable, with a slight increase anticipated for August [26][28]. Inflation and Consumer Behavior - The core PCE inflation rate remains above the Fed's target at 2.6% year-over-year, but recent trends suggest a moderation in inflationary pressures [2][61]. - The report highlights a disconnect between consumption and income growth, with real disposable income growth slowing [9][61]. Trade and International Factors - The nominal goods and services trade balance widened to -$80.1 billion in July, reflecting a significant increase in the goods deficit [23]. - The report notes that service imports may receive a boost from payments related to the Paris Olympics, impacting the trade balance [23].