Market Overview - The U.S. stock market experienced a significant decline, with the Dow Jones dropping over 500 points, the Nasdaq falling nearly 2%, and the S&P 500 index decreasing by 1.5% [2] - Technology stocks collectively plummeted, with notable declines in companies such as Nvidia, which fell nearly 4%, and TSMC, which dropped about 2% [3][4] - The fear index surged by 17%, indicating increased market anxiety [5] Economic Context - September has historically been a weak month for U.S. stocks, with the S&P 500 index averaging a decline of 4.2% over the past five years and over 2% in the last decade [7] - Concerns over high valuations, particularly in large-cap tech stocks, have contributed to the market downturn, with all major tech stocks experiencing declines [8] - The U.S. 30-year Treasury yield approached 5%, raising worries about long-term debt amid increasing fiscal deficits [8] Global Market Impact - The UK market faced renewed sell-offs, with long-term yields reaching their highest levels since 1998, while France is experiencing a severe political crisis affecting its bond market [11] - Analysts predict a challenging start to September, with expectations of a 25 basis point rate cut by the Federal Reserve in September and a cumulative cut of 50 basis points by the end of 2025 [12] Investment Strategies - UBS suggests that investors underweight in stocks should consider gradually entering the market and increasing exposure during downturns, particularly in sectors like energy, healthcare, and technology [12] - Morgan Stanley's Michael Wilson believes that the U.S. stock market will continue to rebound, supported by Fed rate cuts and strong corporate earnings, despite the anticipated seasonal weakness [12] Company-Specific News - Warren Buffett expressed disappointment over Kraft Heinz's decision to split, which he believes does not resolve the issues stemming from the merger he facilitated nearly a decade ago [16][18] - Following Buffett's comments, Kraft Heinz's stock plummeted by 6%, reflecting investor concerns about the company's future [16][18] - Since the merger in 2015, Kraft Heinz's stock has declined nearly 70%, with its market capitalization shrinking to $33 billion [18]

Core Viewpoint - The global long-term government bonds are experiencing significant sell-offs, with rising yields across countries like Japan, Germany, the UK, and France, as concerns over fiscal deficits replace central bank policies as the main focus of the market [1][10]. Group 1: Bond Yield Trends - Japan's 10-year government bond yield rose by 2.5 basis points to 1.595%, the highest level since 2008 [1]. - The 30-year Japanese government bond yield saw its largest increase in two months, while the German 30-year bond yield approached a 14-year high [1]. - The U.S. 30-year bond yield reached a one-month high of 4.98% [1]. Group 2: Market Reactions and Concerns - Concerns over increased government debt, oversupply of bonds, and persistent inflation are driving market anxiety, particularly in light of Japan's upcoming elections and Trump's tariff threats [1][9]. - The market anticipates that election outcomes may pave the way for additional fiscal stimulus in Japan, contributing to rising long-term yields [1][6]. Group 3: Fiscal Policy Implications - Japan's ruling party is proposing cash subsidies while the opposition plans tax cuts, reflecting heightened budgetary risks as the July 20 Senate elections approach [6]. - Despite the Japanese Finance Ministry's efforts to reduce long-term bond issuance, borrowing costs continue to rise, indicating a demand gap as major insurance companies avoid ultra-long bonds [6]. Group 4: Global Impact of Japanese Bond Yields - BCA Research warns that changes in Japanese bond yields, as a significant source of global liquidity, could pose a major threat to U.S. tech stocks [2][13]. - The correlation between U.S. tech stock valuations and Japanese government bond yields suggests that a rise in Japanese yields could tighten global liquidity, impacting tech stock valuations reliant on low-cost funding [13].

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core Viewpoints - The supply of coking coal is abundant, the inventory of clean coal continues to increase, the optimistic sentiment from tariff agreements has faded, and coal prices have fallen again. The main contradiction in the next 2 - 3 quarters is that the off - season expectations still dominate the weak reality. - Macro - wise, market sentiment has improved slightly, and the market is mainly driven by the rigid demand for coal replenishment. The main contract of coking coal is expected to fluctuate weakly. [8] 3. Summary by Directory 3.1 Week - on - Week Summary - **Market Review** - The daily average output of raw coal from 523 coking coal mines was 1.936 million tons, a week - on - week decrease of 7,000 tons. - The daily average output of 110 coal washing plants was 52,790 tons, a decrease of 30 tons. - The total inventory of coking coal (independent coking plants + 6 major ports + steel mills) was 1.84753 million tons, a week - on - week decrease of 9,790 tons and a year - on - year increase of 5.98%. - The average loss per ton of coke for 30 independent coking plants nationwide was 15 yuan/ton. - The profitability rate of steel mills was 59.74%, a week - on - week increase of 0.43 percentage points and a year - on - year increase of 5.63 percentage points. - The molten iron output at the demand side declined from a high level. The daily average molten iron output was 243,600 tons, a week - on - week decrease of 1,170 tons and a year - on - year increase of 6,800 tons. [7] - **Market Outlook** - **Macro - aspect**: From January to April, the national real estate development investment was 277.3 billion yuan, a year - on - year decrease of 10.3%; residential investment was 211.79 billion yuan, a decrease of 9.6%. The total foreign direct investment of the whole industry in China from January to April was 57.54 billion US dollars, a year - on - year increase of 7.5%. - **Overseas aspect**: On May 20, China and the ten ASEAN countries completed the negotiation of the China - ASEAN Free Trade Area 3.0 version. The 30 - year US Treasury yield soared to 5.1%, approaching a 20 - year high. - **Supply - demand aspect**: Supply is abundant, the inventory of clean coal continues to increase, and coal prices have fallen again. The off - season expectations in the 2 - 3 quarters still dominate the weak reality. - **Technical aspect**: The weekly K - line of the main coking coal contract is below the 60 - day moving average, showing a bearish trend. - **Strategy recommendation**: The main contract of coking coal is expected to fluctuate weakly. [8] 3.2 Futures and Spot Market - **Futures Market** - As of May 23, the open interest of coking coal futures contracts was 602,400 lots, a week - on - week increase of 96,100 lots. - As of May 23, the spread between coking coal contracts 1 - 9 was 19.00 yuan/ton, a week - on - week decrease of 2.50 yuan/ton. - As of May 23, the registered warehouse receipts of coking coal were 3,100 lots, a week - on - week decrease of 100 lots. - As of May 23, the spread between the main contracts of coke and coking coal was 581.50, a week - on - week decrease of 11.50 points. [14][20] - **Spot Market** - As of May 22, 2025, the flat - price of coke at Rizhao Port was 1,460 yuan/ton, a week - on - week decrease of 50 yuan/ton; the ex - factory price of coking coal in Wuhai, Inner Mongolia was 1,090 yuan/ton, a week - on - week decrease of 40 yuan/ton. - As of May 23, the basis of coking coal was 262.5 yuan/ton, a week - on - week increase of 15.50 yuan/ton. [26] 3.3 Industrial Chain - **Upstream** - From January to April, the national raw coal output was 1.585 billion tons, a year - on - year increase of 108.95 million tons and a growth of 6.6%. In April 2025, the national raw coal output was 389 million tons, a year - on - year growth of 3.8%, with the growth rate slowing down by 5.8 percentage points compared with March. - In April 2025, China's coking coal output was 4.16147 million tons, a year - on - year growth of 8.23%. - In 2024, China's imported coal was 540 million tons, a year - on - year increase of 14.4%, hitting a record high, including 121.895 million tons of coking coal, a year - on - year increase of 19.62%. From January to April 2025, the total imported coking coal in China was 3.64089 million tons, a year - on - year decrease of 3.09%. [53][57] - **Mid - stream** - The capacity utilization rate of 523 coking coal mines was 86.3%, a week - on - week decrease of 3.0%. The daily average output of raw coal was 1.936 million tons, a week - on - week decrease of 7,000 tons. - The starting rate of 110 coal washing plants was 62.36%, a week - on - week increase of 0.27%; the daily average output was 52,790 tons, a decrease of 30 tons; the raw coal inventory was 316,480 tons, an increase of 10,970 tons; the clean coal inventory was 214,740 tons, an increase of 11,480 tons. - The daily average coke output of independent coking enterprises was 67,300 tons, an increase of 150 tons. - The total inventory of coking coal (independent coking plants + 6 major ports + steel mills) was 1.84753 million tons, a week - on - week decrease of 9,790 tons and a year - on - year increase of 5.98%. - The inventory of imported coking coal at 16 ports was 535,490 tons, a decrease of 9,980 tons; the inventory of coke at 18 ports was 276,680 tons, a decrease of 4,700 tons. - The total inventory of coking coal of independent coking enterprises was 865,730 tons, a decrease of 19,200 tons; the available days of coking coal were 9.7 days, a decrease of 0.24 days. [30][34][37] - **Downstream** - The daily average molten iron output was 243,600 tons, a week - on - week decrease of 1,170 tons and a year - on - year increase of 6,800 tons. - The profitability rate of steel mills was 59.74%, a week - on - week increase of 0.43 percentage points and a year - on - year increase of 5.63 percentage points. - The capacity utilization rate of 230 independent coking enterprises was 75.18%, a week - on - week decrease of 0.05%; the daily average coke output was 53,590 tons, a decrease of 40 tons. - The average loss per ton of coke for 30 independent coking plants nationwide was 15 yuan/ton. [43][49]

Core Viewpoint - The downgrade of the U.S. credit rating by Moody's has raised concerns among Hong Kong fund managers about potential forced selling of U.S. Treasury bonds, particularly under the strict regulations of the Mandatory Provident Fund (MPF) system [1][3][4] Group 1: Impact of Credit Rating Downgrade - Following Moody's downgrade, only Japan's R&I maintains a AAA rating for the U.S., which could lead to significant selling pressure on U.S. Treasuries held by Hong Kong funds [3][4] - The total assets of MPF funds that could hold U.S. Treasuries amount to approximately HKD 484 billion (around USD 61.8 billion) by the end of 2024 [3] - The Hong Kong Investment Funds Association has expressed concerns to regulatory bodies, suggesting that exceptions should be made for U.S. Treasuries even if their rating falls below AAA [3][4] Group 2: Market Reactions and Predictions - There has been a notable increase in short positions on U.S. Treasuries, with traders betting on a rise in the 10-year Treasury yield to 5%, reflecting growing concerns over U.S. government debt and deficits [1][5] - Major Wall Street strategists, including those from Goldman Sachs and JPMorgan, are raising their yield forecasts due to the ongoing fiscal challenges posed by the Trump tax cuts [5][6] - Historical data indicates that downgrades in sovereign ratings typically have a more pronounced short-term negative impact on U.S. equities, while the long-term effects on Treasury yields are less significant [5][6] Group 3: Broader Economic Implications - The ongoing discussions around the Trump tax cuts and their potential passage could exacerbate the U.S. fiscal situation, leading to increased market volatility regarding long-term Treasury yields [6] - Concerns about potential retaliatory actions from foreign nations, such as selling U.S. Treasuries in response to tariffs, could pose systemic risks to the Treasury market, although historical trends suggest that such actions have limited impact [6]