Core Viewpoint - The article discusses the potential for a slow-moving bull market in China, driven by a shift in global monetary policy and increased liquidity, particularly favoring Asian markets, including China and Hong Kong [2][3][6]. Group 1: Market Dynamics - The global monetary order is shifting from a strong dollar to a weak dollar, with a focus on a G-2 framework in trade negotiations between China and the US [2]. - There is a notable concentration of global actively managed money, with 56% in US assets, only 1.8% in Chinese assets, indicating a need for diversification towards Asia [6]. - The liquidity driving the current market rally is primarily influenced by central bank policies, with expectations that the Fed will maintain a supportive stance [5][4]. Group 2: Sector Opportunities - Various sectors are experiencing cycles of rotation, with technology, financials, and materials showing significant movements [7][9]. - A sustainable, slow-moving bull market is anticipated, allowing underperforming sectors to catch up [9]. - The traditional manufacturing space is expected to benefit from the "Involution" campaign, which could enhance corporate earnings and market balance by 2026 [10]. Group 3: Economic Recovery - Current inflation rates are low, with CPI around zero and expected to rise slightly to 0.5% next year, indicating a gradual recovery [15]. - Structural reforms are necessary for broader economic recovery, focusing on job creation and improving the social safety net, particularly for rural retirees [17][18]. - There is significant potential for improvement in social safety nets, which could support consumption and economic stability in China [18].

Summary of China Solar Profitability Tracker Industry Overview - The report focuses on the solar industry in China, specifically tracking the profitability and pricing dynamics of the solar value chain, including Poly, Glass, Wafer, and Module segments [3][12]. Key Highlights 1. **Price Dynamics**: - In September 2025, the solar value chain experienced a price hike of 5% month-to-date (MTD), up from 2% in August, primarily driven by a 15% increase in Glass prices and an 8% increase in Poly prices [3][6]. - The price increase was attributed to active downstream re-stocking activities rather than a recovery in solar installation demand [3][12]. 2. **Inventory and Demand Outlook**: - There is an expectation of a 20% decline in Poly and Glass prices for the remainder of the year due to a buildup of downstream inventory against weak demand [3][12]. - Estimated inventory levels indicate that 130GW of Poly inventory will suffice for module needs, while Glass shipments are projected to decline by 20% month-over-month due to potential production cuts [3][12]. 3. **Sector View**: - The ongoing anti-involution campaign and new restrictions on below-cost pricing are expected to have a mild positive impact on Poly pricing, but downstream players will still need to reduce selling prices to maintain market share amid demand weakness [3][12]. - Long-term profitability is anticipated to remain low without a reduction in Tier 1 capacity [3][12]. 4. **Profitability Trends**: - Cash gross profit margins (GPM) and EBITDA margins improved for upstream companies but deteriorated for downstream players in September [5][9]. - The average cash GPM for Poly was reported at 36%, while for Glass, it was 16% [12]. 5. **Investment Recommendations**: - Preferred segments include Film (Buy on Hangzhou First), High-efficiency Module (Buy on Longi), and Granular Poly (Neutral on GCL Tech) [4]. - Least preferred segments include Glass (Sell on Flat A/H, Xinyi Solar) and Equipment (Sell on Shenzhen S.C. and Maxwell) [4]. Additional Insights - The report indicates that the production-to-demand ratio for the solar value chain is expected to increase to 110% in September from 109% in August, suggesting a slight oversupply situation [13]. - Producer-side inventory days are likely to decline to 34 days in September from 37 days in August, indicating a tightening of inventory levels [15]. This summary encapsulates the critical insights from the China Solar Profitability Tracker, highlighting the current state of the solar industry, pricing dynamics, inventory levels, and investment recommendations.