November 28, 2025 01:33 AM GMT Morgan Stanley Asia Limited Chetan Ahya 亚洲首席经济学家 Chetan.Ahya@morganstanley.com +852 2239-7812 亚洲经济 | Asia Pacific M Idea 观点：中国⸺资本支出在收 缩，下一步如何演变？ 中国的资本支出正在广泛收缩，引发投资者关注。投资和出 口动能是影响通缩前景的关键因素。我们强调三种可能的演 变情境。 要点 在本报告中，我们讨论中国名义FAI放缓的原因、其未来走ⲡ，以及这些变将如 何影响我们对通缩的看法。 Exhibit 1: 中国名义固定资产投资(FAI) 正在收缩⋯⋯ China nominal FAI %Y 3MMA %Y Oct-22 Apr-23 Oct-23 Apr-24 Oct-24 Apr-25 Oct-25 9% 5% 1% -3% -7% -11% -15% -11.2% 18% 14% 10% I (%Y 3MMA) Real estate (14%) Infrastructure (30%) Manufacturing ( ...

Investment Rating - The investment rating for Jiangxi Copper is "Buy" with a target price of HK$27.90, indicating an expected share price decline of 12.2% from the current price of HK$31.76 [6]. Core Insights - The long-term treatment charge and refining charge (LT TC/RC) for copper concentrate is expected to be lower year-on-year in 2026, reflecting a tight supply situation as the LT TC/RC covers approximately 80% of total purchased overseas copper concentrate in 2025, down from 90% in previous years [1][2]. - The company plans to avoid large-scale maintenance work for copper smelting capacity until the LT TC/RC price for the next year is determined, with an anticipated increase in the percentage of spot TC/RC in the fourth quarter of 2025 if the LT TC/RC price remains low [3]. - Management believes that the impact of anti-involution on the copper smelting industry will primarily affect new capacity rather than existing capacity, as copper demand is expected to continue increasing, thus limiting the impact on copper prices [4]. - The copper foil business is projected to incur a net loss in 2025, but strong orders for lithium battery copper foil since September 2025 are expected to improve profitability in 2026, despite processing fees not significantly increasing [5]. Summary by Sections Valuation - Jiangxi Copper's H-shares are valued at HK$27.90 based on a combination of discounted cash flow (DCF) and price-to-book (P/B) fair values, with a DCF valuation yielding an NPV-per-share of HK$32.90 and a P/B valuation yielding HK$22.90 [8].

Summary of ZTO Express Conference Call Company Overview - **Company**: ZTO Express (ZTO.N) - **Industry**: Transportation & Infrastructure in Hong Kong/China Key Points and Arguments Market Share and Competition - ZTO has gained market share in Q4 2025, achieving low-teens year-over-year volume growth quarter-to-date, outperforming the industry due to a decrease in low-value parcels in the market [4][12] - Management believes that market competition has improved, with leading players resuming share gains, which was a positive surprise compared to expectations of stable market shares due to customer lock-up [2][4] - ZTO is not participating in aggressive pricing competition, which is deemed irrational for smaller players with thin margins and weak balance sheets [5][12] Financial Performance - 3Q25 net profit exceeded expectations due to tax credits, while gross profit and operating profit missed estimates [3] - Adjusted EBITDA was in line with expectations, and excluding tax benefits, unit profit increased quarter-over-quarter [3] - The 2025 volume outlook was slightly lowered due to a slowdown in market volume growth [3] Earnings Forecasts and Price Target - EPS forecasts for 2025-2027 have been raised by 3%, 6%, and 4% respectively, reflecting the 3Q25 results and healthier average selling price dynamics [6][15] - The weighted average cost of capital (WACC) assumption was slightly lowered to 13.2% from 13.3% due to a decrease in the cost of debt [6][16] - The price target has been increased by 5% to US$25.00, implying a 13x 2026 estimated P/E, which is below the domestic peer average of 16x [6][16] Shareholder Returns and Capital Expenditure - ZTO expects higher absolute shareholder returns year-over-year, assuming no irrational competition [14] - Capital expenditure guidance for 2025 is approximately Rmb5.5-6 billion, expected to decline to Rmb5 billion in 2026 [14] Risks and Opportunities - Risks still exist, but the company is optimistic about achieving both market share gain and profit growth in 2026 [5][29] - The retail business handles over 9 million daily parcels, representing 8-9% of total volume, with management targeting a higher retail parcel mix in 2026 [13] - Potential mergers and acquisitions are being considered as a growth option [14] Valuation and Investment Thesis - ZTO is viewed as a long-term winner in the industry, with attractive risk-reward dynamics, trading at 11x 2026 estimated P/E and a forward free cash flow yield of 7-8% compared to a peer average of 1% [7][29] - The company’s market leadership in volume and unit profitability supports a positive outlook, with a moderate probability of achieving both market share gain and profit growth [24][29] Additional Important Information - The effective tax rate is expected to be 18%, with a significant reduction in tax expenses noted [17] - The company’s market cap is currently Rmb107,605 million, with an average daily trading value of US$10 million [9] - The stock price closed at US$18.97 on November 19, 2025, indicating a 32% upside to the new price target [9] This summary encapsulates the key insights from the ZTO Express conference call, highlighting the company's performance, market dynamics, and future outlook.

Summary of China Express Industry Conference Call Industry Overview - **Industry**: China Express - **Date**: November 18, 2025 - **Key Focus**: Volume growth slowdown and industry consolidation Key Takeaways Volume Growth and Revenue - Overall express volume in China increased by **7.9% YoY** in October, a decrease from **12.7% in September** [2][11] - Intra-city parcel volume saw a decline of **7.9% YoY** in October compared to a **5% decline in September** [2] - Inter-city parcel growth slowed to **9.5% YoY** in October from **15% in September** [2] - International parcel growth slightly improved to **1.2% YoY** from a **3.1% YoY drop in September** [2] - Revenue growth for the industry slowed to **4.7% YoY** in October, down from **7.2% in September** [2][11] Average Selling Price (ASP) - The industry ASP fell by **3% YoY** and **0.9% MoM** [3][11] - Specific declines in ASPs were noted in Guangdong (Rmb0.28 or -4.1% YoY) and Zhejiang (Rmb0.14 or -3.1% YoY) [3] - Month-over-month, ASPs in Guangdong dropped by **1%**, while those in Zhejiang increased by **3%** [3] Market Concentration - The concentration ratio of the top eight players (CR8) reached **87.8%** in October, an increase of **2.6 percentage points YoY** and **0.9 percentage points MoM** [4][11] - Leading players are gaining market share amid the slowdown, indicating a trend towards consolidation in the industry [11] Additional Insights - The slowdown in volume growth is attributed to "anti-involution" trends affecting the market [11] - Despite the overall ASP decline, leading players are reportedly improving their ASPs month-over-month [11] Conclusion The China Express industry is experiencing a significant slowdown in volume growth and revenue, alongside a notable decline in ASPs. However, the market is consolidating, with leading players increasing their market share. The industry faces challenges from anti-involution trends, which may impact future growth prospects.

Summary of Key Points from the Conference Call Industry Overview - **Focus**: Asian FX and Rates outlook for 2026, with emphasis on macroeconomic trends and investment strategies Core Themes and Arguments 1. **Economic Growth Projections**: - Asia's GDP growth is expected to moderate in 2026, with a forecasted real GDP growth of 4.5% y/y for China, which is below the historical average [13][12] - The growth differential between Asia and the US is narrowing, with US growth remaining near trend supported by investment and fiscal easing [13][12] 2. **Currency Performance**: - Asian currencies underperformed in 2025, gaining only about 2% against the USD, while missing out on significant tailwinds [13][12] - The USD/Asia exchange rate is projected to edge 2-3% higher in 2026, influenced by US AI-driven productivity gains and ongoing labor market weaknesses [3][12] 3. **Investment Strategies**: - Recommended trades include long positions in CNH against the CFETS basket, short IDR against INR, and buying USD/THB put spreads [9][16][35] - The strategy emphasizes opportunistic buying of dips in select USD/Asia longs and receiving 10-year KRW and THB swaps against JPY [9][44] 4. **Market Risks**: - Potential risks include an AI bubble scenario that could push USD/Asia 5-6% higher, and a setback in tech stocks that may negatively impact USD against peers [3][12] - The ongoing resident outflows from open capital account economies are a significant concern, with Asian equity flows recovering only half of the losses from Q1 [3][12] 5. **Bond Market Outlook**: - Asian bond yields are expected to decline at a slower pace, with an average 10-year bond yield drop of only 15bps anticipated over the next 12 months [13][12] - Thailand and Korea are expected to lead the decline in bond yields, while other regions may trade sideways [13][12] Additional Important Insights 1. **China's Economic Position**: - China's current account balance has surged to approximately 4% of GDP, the highest since 2009, driven by strong export growth [19][24] - The yuan is considered undervalued, screening as 7% cheap relative to its historical relationship with export shares [22][18] 2. **Indonesia's Economic Challenges**: - Indonesia faces significant headwinds, including a deteriorating current account balance and shrinking FX reserves, which could pressure the IDR [28][29][33] - The central bank's aggressive rate cuts have narrowed the ID/US rate differentials, further complicating the outlook for the rupiah [27][30] 3. **Thailand's BoP Dynamics**: - Thailand's balance of payments is strong, averaging around 4% of GDP, which supports the THB [35][40] - Seasonal tourism inflows are expected to bolster the baht, with historical trends indicating a tendency for the currency to appreciate during year-end [38][42] 4. **Korea's Monetary Policy**: - The Bank of Korea is expected to cut rates further in 2026, with market pricing for hikes seen as premature given the weak domestic demand [45][46] - Financial stability risks are being addressed through macroprudential policies, although the property market remains a concern [47][46] 5. **Key Dates to Watch**: - Important upcoming events include the G20 meeting, China Politburo meetings, and various central bank meetings that could influence market dynamics [8][12] This summary encapsulates the critical insights and strategic recommendations from the conference call, providing a comprehensive overview of the Asian FX and Rates landscape for 2026.

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **China Economics** sector, focusing on inflation trends and economic indicators in the Asia Pacific region. Core Insights and Arguments 1. **Consumer Price Index (CPI) Trends**: - CPI increased to **0.2% YoY** in October 2025, rebounding from **-0.3%** in September, attributed to a "super Golden Week" which boosted food and service prices [8][6][4] - Core CPI rose to **1.2% YoY**, up from **1.0%** in September, driven by higher gold prices and a low base effect [8][6][4] 2. **Producer Price Index (PPI) Developments**: - PPI showed a slight increase of **0.1% MoM**, compared to **0%** previously, influenced by higher imported prices in non-ferrous metals, particularly copper [8][6][4] - Overall, producer prices remained stable, with commodity prices supported by disciplined production practices [8][6][4] 3. **Inflation Outlook**: - The outlook for inflation remains stable yet lukewarm, with expectations of largely stable inflation data for November and December as the low base effect diminishes [4][8][6] - Anti-involution measures are expected to provide a floor for sequential momentum in inflation [4][8][6] 4. **Sector-Specific Insights**: - Non-ferrous metals, particularly copper, are experiencing strong demand due to supply constraints and global demand driven by AI advancements [3][8] - Prices for daily sundry articles reached a **15-year high of 0.7% MoM**, likely due to transient demand from promotional events [3][8] Additional Important Information - The report includes a detailed summary table of CPI and PPI changes over recent months, highlighting significant fluctuations in various categories such as food, non-food, and core indices [6][8] - The analysis emphasizes the impact of seasonal effects and promotional events on price movements, which may not be sustainable in the long term [2][3][8] This summary encapsulates the key points discussed in the conference call, providing insights into the current economic landscape in China and the broader Asia Pacific region.

Core Viewpoint - The report emphasizes the acceleration of building a new energy system and increasing the proportion of renewable energy supply as outlined in the 14th Five-Year Plan, aiming to construct a strong energy nation [1][2] Investment Highlights - In October, the photovoltaic industry index experienced a slight decline of 1.39%, underperforming compared to the CSI 300 index which had a return of 1.62% during the same period [2] - Most sub-sectors within the photovoltaic industry saw a decrease, with photovoltaic welding strips, silicon materials, and photovoltaic modules showing the highest gains [2] - Key companies such as TBEA, Yubang New Materials, Longi Green Energy, and others showed notable increases in stock prices [2] Industry Performance - Domestic newly installed photovoltaic capacity reached 9.66 GW in September, reflecting a month-on-month increase of 31.25%, although it still represented a year-on-year decline of 53.76% [3] - Cumulatively, from January to September, the domestic newly installed photovoltaic capacity totaled 240.27 GW, marking a year-on-year growth of 64.73% [3] - The export of photovoltaic components was 25.63 GW, showing a month-on-month decrease of 6.01% as the installation peak season concluded [3] Supply Chain Dynamics - In September, domestic polysilicon production was approximately 129,000 tons, a month-on-month increase of 5.3%, while the production of silicon wafers reached 56.85 GW, up 6.46% [3] - The number of operational photovoltaic glass production lines increased, and inventory days significantly rose [3] - The fourth quarter is expected to see a slight decline in terminal component demand, with a gradual reduction in supply across various segments [3] Investment Recommendations - The third-quarter performance of photovoltaic companies showed signs of stabilization and marginal improvement, attributed to the industry's anti-involution measures and rising polysilicon prices [4] - The photovoltaic industry remains undervalued historically, with potential for valuation recovery as policies regarding product sales prices, mergers, and industry entry barriers are expected to be implemented [4] - Focus on leading companies in sub-sectors such as energy storage inverters, BC batteries, perovskite batteries, photovoltaic adhesive films, photovoltaic glass, and polysilicon materials is recommended [4]

Summary of the Conference Call Industry Overview - The focus is on the **China A-share Equity Strategy**, particularly the **CSI-300 index** which is expected to perform positively until the end of 2026 [2][5][6]. Key Points and Arguments - **Market Outlook**: - The CSI-300 index is projected to have a **26% to 32% upside** by the end of 2026, based on a re-rating to +1.5SD/+2SD relative to the October 17 close [2][7]. - The expected **consensus EPS growth rates** for 2026 and 2027 are **13.4% and 11.8%**, respectively [2][7]. - **Liquidity and Market Dynamics**: - A-share liquidity remains healthy, with the **A-share velocity** easing to **4%** from a peak of **6.8%** [5][17]. - The **margin financing balance** increased from **Rmb2.3 trillion** in early September to **Rmb2.4 trillion** in early October, indicating a rise from **4.7% to 5%** of the A-share free-float market cap [5][22]. - **Net inflows** into A-share ETFs totaled **Rmb17 billion** from October 13 to 16, with specific sectors like banks and semiconductors seeing the most inflow [5][37]. - **Potential Risks**: - Risks are primarily associated with uncertainties in **US-China trade talks** [2][5]. - The ongoing **US-China tensions** since October 9 are reminiscent of earlier market corrections, suggesting a cautious approach [5][6]. - **Investment Opportunities**: - The report highlights **IT and healthcare A-share innovators** as potential investment opportunities, focusing on metrics such as market capitalization and overseas revenue [2][5][11][12]. - Specific stock screens include: - **IT localists** and **globalists** in sectors like semiconductors and smartphone supply chains [11]. - **Healthcare globalists** in innovative drugs and healthcare equipment [12]. - Top A-share listings by market cap in sectors such as autos, batteries, and chemicals [14]. Additional Important Insights - The **4th Plenary Session** of the 20th Central Committee is expected to provide insights into government policies that could impact market sentiment [5][6]. - The **risk-free rate** remains stable, which may support investors' risk appetite despite profit-taking observed in household savings [5][26]. - Upcoming key events include meetings between Chinese and US officials, which could influence market dynamics [6][5]. This summary encapsulates the essential insights from the conference call, focusing on the outlook for the A-share market, liquidity conditions, potential risks, and investment opportunities within the sector.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **China Economics** sector, particularly analyzing inflation trends and upstream prices influenced by anti-involution efforts [1][4][6]. Core Insights and Arguments - **Inflation Trends**: - Headline CPI remained soft at -0.3% YoY, while core inflation rose to 1.0% YoY for the first time in 19 months, indicating a gradual recovery in core goods inflation, particularly in gold jewelry and durable goods [1][4][6]. - Core goods inflation is estimated at 1.5% YoY, the highest since January 2020, driven by significant increases in gold jewelry prices (6.5% MoM and 42.1% YoY) [4][6][9]. - **PPI Dynamics**: - PPI deflation narrowed to -2.3% YoY, with a sequential change of 0.0% MoM, suggesting some stabilization in upstream prices due to anti-involution initiatives [4][6][16]. - The contraction in ferrous metal smelting narrowed significantly to -0.6% YoY from -10.0% YoY two months prior, indicating a recovery in this sector [4][6][16]. - **Sector Performance**: - Downstream sectors showed limited improvement, with PPI for autos contracting by -3.0% YoY and electronics prices declining by -2.5% YoY, highlighting ongoing demand challenges [4][6][16]. - Energy prices negatively impacted headline CPI, with transportation fuel prices dropping -1.7% MoM [4][6]. - **Future Outlook**: - The GDP deflator is expected to find a bottom in Q3 2025, supported by base effects and anti-involution initiatives, but the medium-term reflation outlook remains uncertain and heavily reliant on demand-side factors [6][7]. - Policymakers are expected to focus on supply and demand rebalancing in the upcoming 15th Five-Year Plan, with potential regulatory actions in the solar sector [6][7]. Additional Important Insights - **Consumer Behavior**: - The report notes that one-off factors, such as gold prices and trade-in subsidies, may not provide sustainable inflationary impulses going forward, emphasizing the need for a more balanced demand-supply dynamic [7][16]. - **Sector-Specific Developments**: - The report highlights price increases in solar energy and a narrowing contraction in lithium battery prices, indicating potential growth areas within the energy sector [4][6][16]. - **Policy Implications**: - The anti-involution initiative is seen as a critical factor in stabilizing prices, with explicit announcements from the National Development and Reform Commission (NDRC) expected to support this effort [6][7]. This summary encapsulates the key points from the conference call, providing a comprehensive overview of the current economic landscape in China, particularly regarding inflation and sector performance.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Chemicals, specifically focusing on the Chinese chemicals market and its dynamics in relation to global trade tensions and government policies [2][8] Core Insights and Arguments - **Near-Term Trading Outlook**: Demand in the Chinese chemicals sector remains weak, but a slight improvement is expected in Q3 2025 compared to previous quarters. Aromatic chains are performing better than olefins, which are under price and margin pressure. TDI prices initially rose due to a force majeure event in Europe but later declined, while MDI demand is lukewarm, likely impacting Q3 results negatively [3][4] - **Impact of Trade Tensions**: Ongoing trade tensions between the US and China are expected to affect production in the white goods sector towards the end of 2025. Initial consumer subsidies of RMB300 billion for electronics and household goods led to front-loaded consumption in the first half of 2025, but expectations for the fourth quarter and into 2026 are weakening [4][5] - **Export Restrictions on Battery Materials**: China has intensified export restrictions on battery materials, including high energy density batteries and NCM materials, which were previously restricted in 2023. This trend is expected to continue impacting the market [5][6] - **Anti-Involution Policies**: The Chinese government is focused on controlling excess capacity, but the execution of these policies remains uncertain. The upcoming fourth plenary session of the 20th Central Committee may provide more clarity on these policies [6][10] - **Options for Capacity Management**: The government has three potential options for managing old capacity: forced closures, upgrading existing plants, or replacing old capacity with new. Some companies are already planning upgrades to allow for mixed feedstock, which could mitigate risks from geopolitical disruptions [10][11] - **Investor Sentiment**: While investor sentiment is improving, it remains relatively weak. Many investors are cautious about calling the bottom of the cycle, leading to expectations of range-bound stock performance over the next six months [11] Additional Important Insights - **Seasonality in Chemical Demand**: The typical seasonal strength in Q3 for chemicals is not as pronounced this year, indicating broader market challenges [3] - **Market Expectations**: There is a general expectation for price stabilization in the property market, but immediate effects are not anticipated [4] - **Government Actions**: The Chinese government’s approach to managing the chemicals sector is still evolving, with potential implications for future capacity and production strategies [6][10] This summary encapsulates the key points discussed in the conference call, highlighting the current state of the chemicals industry in China, the impact of trade tensions, and the outlook for investor sentiment and government policies.