Investment Rating - The report maintains an "Overweight" (OW) rating for several key financial companies including AIA, CCB, CMB, Ping An Insurance, Futu, and CITIC Securities [5][6][9]. Core Insights - The report suggests that China may be on the verge of a 1998-1999 Japan-style beta rally, with potential gains of up to 80% as indicated by strategist Wendy Liu [2][3][6]. - The Jinke case, involving a holistic reorganization of a distressed developer, is seen as a significant step towards addressing China's property oversupply and improving recovery rates [2][3][6]. - The report highlights the importance of focusing on "financial survivors" in the current market environment, which includes companies with strong local economic presence [2][3][6]. Detailed Highlights - The Jinke Real Estate debt reorganization, which occurred on May 10-11, is expected to yield a recovery rate more than seven times higher than liquidation [2][3]. - The report emphasizes that if China implements substantial financial sector reforms, it could mirror the conditions that led to the TPX's 80% beta rally in 1998 [6]. - The report notes that long-term money is becoming less optimistic about Chinese banks, with concerns about the sustainability of the current rally and rising questions regarding asset quality risks [6]. Sector Key Newsflow - In Japan, global mutual funds have begun to increase their positions in banks, indicating a potential bear-squeeze rally in the auto sector that could benefit banks [9]. - The report mentions that the MSCI ACWI is near an all-time high, supported by CTAs building long positions across various sectors, particularly in machinery and banks [9]. - The ECB is expected to cut rates by 25 basis points, with no clear signal for future cuts, indicating a cautious approach to monetary policy [13].