Report Industry Investment Rating - The global economy in the macro and financial sector is rated as (Bullish) [1] Core View - The global economy maintains an upward direction, with China strengthening its domestic circulation, the US retail and food sales increasing, the market expecting the Fed to cut interest rates, the US manufacturing PMI expanding, China improving manufacturing profits, the European Central Bank cutting interest rates, Germany expanding its military and increasing industrial output, and the US government promoting AI development [1] Summary by Related Catalogs Important Information - The Trump administration's AI action plan indicates the US views AI as a zero - sum game, with data center power consumption expected to rise from 4.4% of the US total in 2023 to 6.7% - 12% in 2028 [1] - 84% of US companies' EPS and 79% of revenues are above expectations, with revenue surprises being the strongest in 4 years [1] - South Korea's corporate governance reform has attracted over $3 billion in foreign capital inflows in July, and the KOSPI has risen over 3% this year, with a total market value back to $2 trillion [1] - The possibility of the Bank of Japan raising interest rates again this year has resurfaced [1] - The US - Japan tariff agreement has pushed the Japanese stock market to a new high, but technical indicators show risks [1] - European small - cap stocks have a regional distribution advantage, with 60% of their income from Europe, and have seen 10 consecutive weeks of net inflows [1] - The key for gold prices to rise is whether ETF fund inflows can be reignited [1] Global Economic Logic - China is shifting from price - cutting competition to value - optimization. The US retail and food sales in June increased by 0.6% month - on - month. The market expects the Fed to cut interest rates in September and accelerate in 2026. The US manufacturing PMI in June was 52.0. China's manufacturing profits improved in June. The European Central Bank has cut interest rates 8 times. Germany's military has expanded by 30%, and its industrial output in May increased by 1.2% month - on - month. The US government released an AI action plan, and Meta plans to invest hundreds of billions of dollars in large data centers [1]

Group 1 - The core viewpoint of the news is the significant restructuring of the board of directors at Yingda Fund Management Co., which raises concerns about governance stability due to over 50% turnover in the last 12 months [2][4] - The board size increased from 7 to 9 members, with four new directors appointed by the major shareholder, State Grid Yingda International Holdings Group, replacing two existing directors [2][3] - The removal of the supervisory board is seen as a move to enhance decision-making efficiency and aligns with the new Company Law that allows for the replacement of supervisory functions with an audit committee [4] Group 2 - The new board members, including Fan Yuhui and Li Bin, have backgrounds in investment management and risk control, which may help Yingda Fund explore new business areas such as energy-themed equity products and green finance [3][4] - The fund's fixed income business remains strong, with bond fund assets reaching 44.611 billion yuan, accounting for 73% of total assets, while equity products are significantly underrepresented, with only 0.971 billion yuan, or 1.6% [3] - The governance reform at Yingda Fund is viewed as a potential model for the public fund industry, emphasizing the need for effective governance and business transformation to achieve competitive advantages [4]

Core Viewpoint - Shanghai Electric Group Co., Ltd. plans to abolish its supervisory board and amend its articles of association to enhance corporate governance and comply with legal and regulatory requirements [1][2]. Group 1: Corporate Governance Changes - The company will cancel the supervisory board, transferring its responsibilities to the audit committee of the board of directors [1][2]. - Amendments to the articles of association will include the removal of references to the supervisory board and related terms, replacing them with "audit committee" [2][3]. Group 2: Legal Compliance - The changes are in accordance with the Company Law of the People's Republic of China and relevant regulations from the Shanghai Stock Exchange [1][2]. - The board of directors has approved the proposal to abolish the supervisory board and amend the articles of association, which will be submitted for shareholder approval [2].

Core Viewpoint - The withdrawal of Alimentation Couche-Tard's acquisition proposal for Seven & i Holdings marks a significant failure in a potential major merger, highlighting the strategic challenges faced by traditional retail giants in a changing market landscape [1][2][8]. Group 1: Acquisition Details - Alimentation Couche-Tard announced the withdrawal of its nearly $47 billion acquisition proposal for Seven & i Holdings after a year of limited due diligence opportunities and unproductive discussions with the management [1][6]. - Seven & i confirmed the unilateral termination of negotiations and expressed disagreement with ACT's claims, but was not surprised by the decision [1][10]. - Following the announcement, Seven & i's stock price plummeted by 9.16%, while ACT's stock surged by 17% [10]. Group 2: Market Context - The global convenience store market is shifting from expansion to competition, with operational efficiency becoming the core competitive advantage [2][11]. - The Japanese convenience store market is experiencing significant changes, with a notable increase in M&A activity, as evidenced by a 232% year-on-year growth in transaction value in the first half of 2025 [8]. - Seven & i's performance has been declining, with a 0.7% drop in revenue and an 11% decrease in operating profit in Q1 of FY2025, marking five consecutive quarters of negative growth [10][12]. Group 3: Strategic Responses - In response to its challenges, Seven & i is undergoing leadership changes and restructuring, including the appointment of a new CEO and the sale of non-core assets [12]. - Seven & i aims to enhance shareholder returns through stock buybacks and potential IPOs of its North American business, despite the failed acquisition [12]. - The company must redefine its value creation logic to adapt to the structural changes in the convenience store industry and find new growth opportunities [12].

Group 1 - Alimentation Couche-Tard Inc. terminated its acquisition of Japan's Seven & i Holdings Co., leading to significant losses for investment banks like Goldman Sachs and Morgan Stanley [1] - The acquisition was valued at 6.77 trillion yen (approximately 46 billion USD) and was expected to be the largest global merger by 2025 [1] - The failure of the deal is attributed to prolonged negotiations and Couche-Tard's claim of "meaningful negotiations" not taking place [1] Group 2 - Following the announcement, Seven & i's stock price fell by 9.16%, marking the largest single-day drop in three months [2] - Seven & i plans to maintain its independent operational strategy and aims for approximately 2 trillion yen in shareholder returns by the end of fiscal year 2030 through stock buybacks and strategic partnerships [2] - The failed acquisition also impacted other sectors, with Mitsui & Co. missing a chance to sell its 2% stake in Seven & i for about 1 billion USD [2] Group 3 - The Japanese M&A market saw a significant increase, with transaction volumes reaching 232 billion USD in the first half of 2025, more than doubling year-on-year [2] - This surge is driven by government reforms aimed at improving corporate governance and a low-interest-rate environment that encourages foreign investment and private equity activity [2][3] - Major Japanese companies like Toyota and NTT are pursuing privatization of listed subsidiaries, while investment banks are expanding their operations in Japan to capitalize on this trend [3]

Group 1 - The Japanese stock market is expected to face a prolonged decline following the upcoming Senate elections, with predictions indicating that the ruling coalition may lose its majority, impacting Prime Minister Shigeru Ishiba's government [1] - Political concerns have already affected market performance, with local stocks underperforming compared to the MSCI World Index this month [1] - If the ruling party loses its majority, the market may take an average of 35 to 75 days to bottom out, with an average total decline of about 8% during this period [1] Group 2 - The Tokyo Stock Exchange index fell by 1.2% in July after three months of gains, with a potentially weak minority government complicating trade negotiations with the U.S. and disrupting investor sentiment [2] - The increase in tariffs by Trump on Japanese goods, particularly the rise from 24% to 25%, has negatively impacted Japan's exports and heightened the risk of a technical economic recession [5] - The upcoming elections may influence corporate governance reforms in Japan, which have been a significant driver of the stock market's rise in recent years [5] Group 3 - There is a growing populist sentiment in Japan, similar to trends seen in the West, with income redistribution becoming an important theme moving forward [7] - The impact of the elections on Japan's $6.8 trillion stock market could be complex, with export companies potentially benefiting from yen depreciation while consumer stocks may rise due to opposition proposals to lower food sales tax [7] - If extreme right and left-wing parties gain strength, there could be a "triple decline" in the yen, bonds, and stocks [7]

Group 1 - The upcoming Japanese Senate elections may lead to the ruling coalition losing its majority, which could negatively impact the country's $6.8 trillion stock market [1] - The Japanese stock market has underperformed compared to the MSCI global index this month, raising concerns about the potential governance capabilities of a weak minority government [1][4] - Political uncertainty is eroding investor confidence, as evidenced by a 1.2% decline in the Tokyo Stock Exchange index after three months of gains [4] Group 2 - Historical data indicates that if the ruling party loses in elections, the market may take 35 to 75 days to bottom out, with an average total decline of about 8% [4] - Analysts warn of a potential "triple whammy" in the Japanese financial market, affecting stocks, bonds, and currency if extreme political factions gain power [6] - A weaker yen could benefit exporters affected by U.S. tariffs, while opposition parties' proposals to cut food consumption taxes may boost consumer stocks [6] Group 3 - The election may have profound implications for corporate governance reforms, a key driver of recent stock market gains in Japan [7] - The potential coalition formation by the ruling party could alter its stance on corporate governance, which investors may not be fully aware of [8] - Rising populism in Japan is reflected in increasing support for new political parties advocating for changes in profit distribution models [8]

Group 1 - South Korea's three major financial institutions have decided to establish a "Joint Task Force for Combating Stock Price Manipulation" by the end of this month [1][2] - The task force will conduct joint investigations into significant manipulation cases and enforce a "one violation, lifetime delisting" principle for unfair trading practices [2] - The KOSPI index reached its highest closing level in nearly four years, closing at 3133.74 points, with a trading volume of 6.373 billion shares and a total transaction value of 12.5 trillion KRW [2] Group 2 - President Lee Jae-myung's administration aims to boost the stock market, which has faced significant challenges, including a power vacuum and substantial foreign capital outflows [2][3] - Key initiatives include corporate governance reforms, a supplementary budget of at least 30 trillion KRW to stimulate consumption, and significant investments in AI and semiconductor industries [3] - The government plans to invest 100 trillion KRW in AI development and infrastructure, aiming to create a large language model and open-source it [3] Group 3 - The current administration is seen as making historic commitments to shareholder rights, addressing the root causes of the "Korean discount" in the market [4] - Previous attempts by past presidents to resolve shareholder issues have been largely ineffective, with only 14% of companies participating in voluntary value enhancement plans [4] - The proposed amendments to the Commercial Act will clarify the fiduciary duties of directors to shareholders, contrasting with the current law that prioritizes the interests of major shareholders [4] Group 4 - South Korea lifted its ban on "naked short selling" on March 31, 2023, which had been illegal and was previously enforced to stabilize the market during the pandemic [5] - The Financial Services Commission has imposed significant penalties on BNP Paribas and HSBC for repeated violations of short-selling regulations, totaling 2.03 million USD [5] - Following the discovery of large-scale illegal short-selling operations, the Financial Services Commission decided to ban short selling in the stock market until June 2024, with severe penalties for illegal profits [6]

Group 1 - Fund manager Mark Prescott is reducing holdings in Chinese and Japanese stocks while increasing investments in South Korean stocks, betting on South Korea to provide the best returns in emerging markets and Asia over the next decade [1] - Prescott expects an annual return of 11%-12% (in USD) for South Korean stocks over the next ten years, driven by technology stocks related to the AI boom and a political willingness to drive corporate reforms [1] - The South Korean composite stock index (Kospi) has risen 30% this year, making it one of the best-performing indices globally by 2025, with global funds investing approximately $3 billion in the South Korean stock market around the election of President Yoon Suk-yeol [1] Group 2 - The South Korean government is encouraging corporate governance reforms through a "value enhancement" plan, which has been positively received by Prescott, especially with recent legislative changes aimed at addressing long-standing concerns about minority shareholder rights and the dominance of family-run conglomerates [4] - South Korea's weight in the MSCI Emerging Markets Index is less than 11%, compared to China's 26%, making South Korea more attractive relative to China [4] - Prescott highlights that South Korea has similar valuation attractions to China but with stronger fundamentals, lacking the burdens of a real estate sector and uncertainties around shareholder governance [4] Group 3 - Prescott is optimistic about specific stocks like SK Hynix and Samsung Electronics, which are crucial manufacturers of high-bandwidth memory chips essential for AI, and notes their undervaluation [4] - Despite potential risks in aligning corporate behavior with government plans, the new government’s commitment to fiscal reforms is expected to benefit consumers and the banking sector [5] - Prescott views the current situation as the beginning of a journey for South Korea as an investment theme, suggesting that the potential for capital flow and revaluation is just the tip of the iceberg [5]

Core Viewpoint - Japanese companies have undergone significant changes in their operational models over the past three decades, particularly shifting from equipment investment to increasing stock dividends, which raises concerns about their growth potential [3][5][6]. Group 1: Investment Trends - Since 2001, the ratio of equipment investment to stock dividends for large Japanese companies has drastically decreased from 6.58 to 0.95 by 2021, indicating that stock dividends have surpassed equipment investments for the first time since World War II [5][6]. - The total amount of stock dividends has increased approximately sixfold over the past 20 years, while equipment investment has remained relatively stagnant at around 20 trillion yen [5][6]. - In 2021, stock dividends reached 24.6 trillion yen, while equipment investment was only 22 trillion yen, further widening the gap [5][6]. Group 2: Corporate Governance and Management Style - The shift in Japanese corporate governance began in 2001, coinciding with reforms that encouraged a more shareholder-focused approach, often at the expense of employee investment and equipment spending [6][7]. - The focus on shareholder returns has led to a significant increase in profit margins, but this has primarily benefited shareholders rather than fostering sustainable growth [7][15]. - Japanese small and medium-sized enterprises (SMEs) have maintained a more balanced approach, with a ratio of equipment investment to stock dividends of 3.06 in 2021, indicating a more proactive investment attitude compared to large corporations [7][8]. Group 3: Macroeconomic Context - Major macroeconomic events, such as the bursting of the asset bubble in 1991, the 2008 financial crisis, and the COVID-19 pandemic, have significantly impacted the operational environment for Japanese companies [8][12][13]. - These events have led to a pattern of "going with the flow," where companies have reacted passively to external pressures rather than proactively adapting their strategies [8][15]. - Historical analysis suggests that Japan's economy has experienced significant changes approximately every 17 years, indicating a cyclical nature to these macroeconomic shifts [12][14]. Group 4: Strategic Errors - Japanese companies have made two fundamental errors: significantly increasing stock dividends while limiting investments, and failing to deeply consider their core operational principles [15][16]. - The shift towards prioritizing shareholder interests has resulted in reduced investment in employees and long-term growth strategies, which may not be sustainable [15][16]. - Companies need to correct these strategic errors and prepare for potential future macroeconomic changes, as the next significant event may occur around 2025 [16][17].