Investment Rating - The report maintains an "Overweight" rating for China in a regional context, favoring North Asia markets with a moderately cyclical sector emphasis [87]. Core Insights - The MSCI China index has rebounded 80% from its cycle lows in late 2022, with expectations for a sustained uptrend, forecasting key indexes to rise 30-40% and reach all-time highs by the end of 2027 [4]. - The report emphasizes strategies such as "buying the dip" and focusing on alpha through specific themes like AI, "Going Global" leaders, and small-cap A-shares [5][6]. - The pro-market policy environment is expected to remain supportive, with measures aimed at stimulating demand and enhancing shareholder returns [6][31]. - Earnings growth is projected to accelerate to low-teen levels, driven by AI advancements and anti-involution measures [38][41]. - Valuations are considered attractive, with the current forward P/E ratio at 12.9x, compared to a macro model implied P/E of 13.7x [70][71]. Summary by Sections Market Outlook - The report forecasts a 30% rise in Chinese equities over the next two years, supported by low-teen trend profit growth and moderate P/E expansion [20][18]. - The transition from a "Hope" phase to a "Growth" phase in the equity cycle is highlighted, where profit growth is expected to drive equity returns [23]. Policy Environment - The report outlines a favorable policy landscape, with ongoing monetary and fiscal support aimed at boosting domestic demand and consumption [31][27]. - Specific measures include a reduction in housing transaction taxes and increased funding for consumption initiatives [31]. Earnings and Valuation - Trend EPS growth is expected to reach 12%, bolstered by AI, anti-involution, and global expansion strategies [38][39]. - The report notes that Chinese equities are currently trading at mid-cycle valuations, with significant discounts compared to developed markets [64][67]. Capital Flows - There is a structural migration of capital towards equities, with trillions of dollars in potential asset reallocation flows anticipated [75][78]. - Foreign investor positioning in Chinese stocks has shown modest improvement, indicating a renewed interest in the market [81].

ab 14 November 2025 Oil prices might recover in 2026-28E, China demand dragged by gasoline/diesel Crude oil: UBS projects Brent crude oil price to average US$64/70/75/bbl in 2026-28, with expectations that the second tranche of OPEC+'s voluntary cuts of 1.65Mb/d may end in Dec 2026 and the effective production increase may be 40% of the headline numbers. Oil prices could improve from later part of 2026, in UBS view. Weak gasoline and diesel consumption might further weigh on China demand and we project 4.4% ...

November 16, 2025 09:00 PM GMT M Asia Pacific Insight 2026 China Equity Strategy Outlook | Asia Pacific From Leap to Sustain We view 2026 as a year of stabilization after 2025's high returns. Index upside is modest with moderate EPS growth and valuation settling at a higher regime, as China reclaims its footing in the global tech race and trade tension abates. Fundamental and thematic stock picking remain the key. EW A share vs. Offshore. 2026's key mission - sustainability after strong 2025: MSCI China and ...

Global Markets Strategy 13 November 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of int ...

Summary of Key Points from the Conference Call Industry Overview - The discussion centers around the **Chinese economy**, specifically focusing on inflation metrics such as **CPI (Consumer Price Index)** and **PPI (Producer Price Index)**, and the potential for reflation in the coming years [1][2][3]. Core Insights and Arguments 1. **CPI and PPI Trends**: - Recent CPI has shown a year-over-year increase of **1.2%**, the highest in nearly four years, while PPI deflation has narrowed for three consecutive months [2][3]. - However, the increase in CPI is largely attributed to temporary factors, indicating that reflation is not yet underway [2][4]. 2. **Temporary Factors Influencing CPI**: - The October CPI increase was driven by short-lived factors such as the "super Golden Week," a favorable base effect, and rising gold prices [4][16]. - The PPI increase was influenced by non-ferrous metals, particularly copper, and a surge in demand for daily sundry items due to early shopping events [4][16]. 3. **Weak Domestic Demand**: - Despite some positive indicators, final demand remains weak, primarily due to a downturn in the housing market and stagnant wage growth [2][6]. - The consumer goods trade-in program, which previously supported core CPI, is losing effectiveness, with participation rates dropping significantly [5][8]. 4. **Deflationary Pressures**: - The ongoing housing market adjustment continues to negatively impact household sentiment, contributing to a deflationary loop that suppresses wage growth [6][10]. - The overall policy framework remains focused on technology and supply, with limited immediate relief for domestic demand [2][21]. 5. **Future Outlook**: - The expectation is for a gradual reflation process from **2026 to 2027**, with the GDP deflator likely remaining negative in **2026** before turning slightly positive in **2027** [2][21]. - Successful reflation is contingent upon economic rebalancing and a shift towards a more balanced growth model, which may take time to implement [21][22]. Additional Important Insights - **CPI Measurement Limitations**: - The CPI may not fully capture underlying price dynamics due to its inclusion of non-market-based components, such as imputed rents for owner-occupied housing [13][16]. - The relatively low weight of housing rent in China's CPI (approximately **5%**) compared to other countries may understate the impact of housing market adjustments on inflation [16][19]. - **Gold Prices Impact**: - The recent surge in gold prices has inflated CPI figures but does not indicate domestic reflation, as the increase is driven by global demand rather than local consumption [16][19]. This summary encapsulates the key points discussed in the conference call regarding the current state and future outlook of the Chinese economy, particularly in relation to inflation and reflation dynamics.

Summary of Key Points from the China Macro Tour Conference Call Industry Overview - **Industry**: Chinese Economy - **Event**: Citi's 2025 China Macro Tour held in Beijing on November 3rd–4th, attended by approximately 20 investors, including former policy advisors, think tank representatives, industry participants, and regulators [1][4] Core Insights and Arguments 1. **Overall Sentiment**: There is a slight improvement in sentiment compared to previous tours, but policy expectations remain muted with no significant breakthroughs anticipated [5][6] 2. **Growth Target**: A consensus exists around maintaining a growth target of "around 5%" for 2026, although some participants suggest it could be lowered to "around 4.5%" due to demographic challenges [6][8] 3. **Consumption Rebalancing**: The necessity for consumption rebalancing was acknowledged, with a target of increasing the consumption ratio by one percentage point annually, requiring government support equivalent to 0.7% of GDP [7][8] 4. **Cyclical Policy Expectations**: Expectations for cyclical policies are low, with potential rate cuts limited to 10-20 basis points in 2026 and a sustained fiscal deficit at 4% [8][9] 5. **Industrial Policies and AI**: A new approach to industrial policies is deemed necessary, focusing on future industries and the role of private companies. Concerns about AI's impact on productivity and job losses were raised [10][11] 6. **External Risks**: Participants expressed cautious optimism regarding external relations, particularly with the US, while acknowledging ongoing strategic rivalry [12][13] 7. **Exports Outlook**: Most participants expect a smaller but positive contribution from net exports in 2026, driven by structural factors despite concerns over external demand [14] 8. **Consumption Rebalancing**: There is a strong consensus on the need to lift consumption, but structural tools to achieve this have not yet shown meaningful progress [15][16] 9. **Housing Market Sentiment**: Sentiment regarding the property sector has worsened, with expectations of continued downturn, particularly in tier 3 and 4 cities [17][18] 10. **RMB Appreciation**: There is a consensus among participants for RMB appreciation, driven by economic fundamentals and the need for RMB internationalization [21][23] Additional Important Insights - **Policy Constraints**: Long-standing constraints on monetary and fiscal policies remain, with concerns about local officials' incentives and the effectiveness of current measures [9][10] - **Inflation Outlook**: Participants expect marginal improvements in PPI and GDP deflator in 2026, but negative numbers may persist [20] - **Housing Policy**: There is skepticism about the effectiveness of current housing policies, with calls for more demand-side measures [22] - **Anti-involution Policies**: Participants do not view anti-involution as a significant solution to current economic challenges, indicating a need for more comprehensive strategies [19][22] This summary encapsulates the key takeaways from the conference call, highlighting the current state and outlook of the Chinese economy as discussed by various participants.

Summary of A-share Q325 Earnings Review Industry Overview - The report focuses on the A-share market in China, highlighting earnings growth and sector performance in Q3 2025. Key Points Overall Earnings Growth - A-share earnings increased by **12.0% YoY** in Q3 2025, a significant improvement from **0.8% YoY** in Q2 2025 [3][19] - Non-financial sectors saw earnings rise by **4.8% YoY**, recovering from a decline of **3.2% YoY** in Q2 2025 [3][19] - Financial sector earnings grew by **19.1% YoY** in Q3 2025, with non-bank financials achieving a remarkable **66% YoY** growth due to a recovering capital market [3][5] Sector Performance - **60% of sectors** reported YoY earnings growth in Q3 2025 [5] - Notable sectors with high growth included: - Non-ferrous metals: **30%+ growth** - Non-bank financials: **66% YoY** - Electronics: **41% YoY** - Media: **57% YoY** - Electrical equipment: **50% YoY** driven by demand for energy storage and solid-state batteries [5][26] Margins and Capital Expenditure - Gross Profit Margin (GPM) and Net Profit Margin (NPM) for non-financial sectors remained flat YoY in Q3 2025, with a Return on Equity (ROE) of **6.7%** [4][30] - Capital expenditure (capex) in non-financial sectors fell by **2.4% YoY** in the first nine months of 2025, indicating a cautious approach to capacity expansion [4] Market Strategy and Outlook - The medium-term outlook for the A-share market is positive, driven by: 1. Gradual earnings recovery 2. Net inflows from various funds 3. Valuation re-rating influenced by technology narratives 4. Sustained market drivers focused on investor-centric capital market development [6] - A shift in market style from 'growth/tech' to 'value/dividend' was observed in early October, with ChiNext and STAR board indices experiencing declines of **10.0%** and **11.4%** respectively [6] Risks and Challenges - Potential risks include a hard landing in the property market, capital outflows due to currency depreciation, and slow structural reforms [37] - Government policies that fail to address these risks could lead to market shocks, particularly if stimulus measures are excessive [37] Additional Insights - The report emphasizes the importance of AI and self-reliance in driving demand and earnings growth in the tech sector [3] - The earnings rebound in cyclical sectors is attributed to a narrowing decline in the Producer Price Index (PPI) since July [3] This summary encapsulates the key findings and insights from the A-share Q325 earnings review, providing a comprehensive overview of the current market landscape and future outlook.

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: China Financials, specifically the manufacturing sector and industrial risks in Asia Pacific [1][6][8] Core Insights and Arguments - **Capital Expenditure (Capex) Trends**: In September, 20 sectors experienced a slowdown in fixed asset investment (FAI) growth, compared to 16 sectors in August. This trend is attributed to continued moderation in FAI growth, which has helped close the gap between manufacturing FAI and industrial production (IP) [2][8] - **Profit Growth**: Manufacturing profit growth improved to 9.9% year-over-year (YoY) in September from 7.4% in August. Year-to-date (YTD) industrial profit increased by 3.2% YoY, up from 0.9% in August. This indicates a shift from expansion to moderation in industrial credit risks [4][8] - **Anti-Involution Efforts**: The ongoing anti-involution efforts in China are believed to have contained intense price competition in certain sectors, leading to improved profit margins. The moderation in industrial liability growth is linked to these efforts and a gradual reduction in funding support since the first half of 2024 [3][4] - **Manufacturing FAI Growth**: YTD manufacturing FAI growth declined to 4.0% YoY in September from 5.1% in August, contributing to the closure of the gap between manufacturing FAI and IP [8][10] Additional Important Insights - **Sector Performance**: In September, 76.6% of sectors (in terms of liabilities) saw a slowdown in capex growth compared to the first half of 2024. Additionally, 39.5% of manufacturing sectors reported better profit trends [9][8] - **Producer Price Index (PPI)**: The PPI remained flat month-over-month in September, with the YoY decline narrowing to 2.3% from 2.9% in August [8] - **Loan Growth**: Medium- to long-term loan growth for industrial firms moderated to 9.7% YoY, while industrial firms' liability growth decreased to 5.2% YoY [8] Conclusion - The overall sentiment in the China financials sector is cautiously optimistic, with signs of gradual improvement in profit growth and a controlled approach to credit supply and investment. The anti-involution measures are playing a significant role in stabilizing the market dynamics and reducing risks associated with overcapacity and credit [3][4][6]

Summary of Jinko Solar Conference Call Company Overview - **Company**: Jinko Solar (688223.SS) - **Industry**: Solar Energy Key Points Earnings Improvement - Jinko Solar upgraded from Sell to Buy due to reduced losses and improved cash flow in 3Q25, with a net loss narrowing by 33.4% quarter-over-quarter (qoq) to Rmb1,012 million [1][2] - Operating cash inflow increased to Rmb2,471 million in 3Q25, up from Rmb1,255 million in 3Q24, indicating a positive trend in cash flow management [2][14] Module Sales and Pricing - Jinko expects further earnings improvement from module sales in 2026E, driven by anti-involution measures and a rising sales mix of high-efficiency products at premium prices [1][4] - Average unit module sales price rose by 8.8% qoq to Rmb0.77/W in 3Q25, despite module shipments declining by 15.9% year-over-year (yoy) to 20.1GW [4][13] High-Efficiency Products - The company began delivering high-efficiency modules (640W or above) in 3Q25, priced at US$1-2 cents/W higher than mainstream products, with a target to increase the sales mix of these products from 5% in 2025 to 60% in 2026E [3][4] Energy Storage Systems (ESS) - Jinko achieved ESS shipments of 3.3GWh in 9M25, with plans to increase shipments to 6GWh in 2025E, up from 1GWh in 2024 [5][16] - The company aims for profit breakeven from ESS sales in 4Q25E and expects to generate profits in 2026E due to economies of scale and a higher overseas sales mix [5][16] Financial Projections - Jinko's net loss for 2026E was cut by 45%, and net profits for 2027E were lifted by 4% based on higher module price assumptions [1][19] - The DCF target price was raised by 50% to Rmb7.50/share, indicating a potential upside for investors [1][19] Market Outlook - Management predicts a 2-3% decline in global solar installations in 2026E, primarily due to a decrease in China, but expects demand growth of 5% from Europe, 10-15% from the Middle East and Latin America, and 30-40% from Southeast Asia [4][19] Cost Management - Jinko plans to reduce unit cell production costs by Rmb0.02-0.04/W in 2026E by using more copper instead of silver in busbars [3][4] - SG&A expenses decreased, contributing to the narrowing of operating losses [13] Financial Summary - Revenue for 3Q25 was Rmb16,155 million, down 34.1% yoy, with gross profit of Rmb607 million and a gross profit margin of 3.8% [12][13] - The company recorded a significant decline in net profit margins, with a forecasted net profit of -Rmb1,143 million for 2026E and a projected recovery to Rmb2,401 million in 2027E [6][21] Other Notable Information - Jinko's module shipments in 9M25 totaled 61.85GW, reflecting a strategic decision to lower capacity utilization to mitigate oversupply pressure [15] - The company has a strong order backlog for ESS, with 80% of orders coming from overseas markets [5][16] This summary encapsulates the critical insights from Jinko Solar's recent conference call, highlighting the company's financial performance, strategic initiatives, and market outlook.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Solar Industry - **Focus**: Polysilicon Supply Consolidation Core Insights and Arguments 1. **Capacity Buyout Consortium**: All 17 polysilicon manufacturers have signed an agreement to establish a capacity buyout consortium, aiming for final establishment by year-end, which is a significant milestone for supply consolidation [1][7] 2. **Excess Capacity Acquisition**: The buyout fund plans to acquire approximately 1.0-1.5 million tons of polysilicon, representing at least one-third of China's total polysilicon capacity, with a potential fund size of RMB 50-80 billion [2][7] 3. **Funding Structure**: The capital structure for the buyout fund is expected to be 30% from asset management companies and 70% from market leaders through equity and debt [2] 4. **Timeline for Acquisition**: Following the establishment of the buyout fund, the acquisition process is expected to commence in the first quarter of 2026 [3] 5. **Positive Outlook for Polysilicon Producers**: The financial performance of top-tier polysilicon producers like GCL, Daqo, and Xinte is expected to improve due to policy support and better profitability since the third quarter of 2025 [4][7] 6. **Price Control Guidance**: There is limited downside risk for polysilicon prices due to high-level price control guidance, with expectations for a peak season starting in the second quarter of the year [4] Investment Recommendations 1. **Preferred Stocks**: GCL Tech (3800 HK) is favored as a buy due to its competitive advantage in production costs and leadership in profitability [4][7] 2. **Target Prices**: - GCL Tech: Current price HKD 1.32, target price HKD 1.80, implying a 36.4% upside [9] - Daqo New Energy: Current price USD 29.43, target price USD 35.00, implying an 18.9% upside [9] - Xinte Energy: Current price HKD 7.89, target price HKD 11.00, implying a 39.4% upside [9] Risks and Considerations 1. **Market Risks**: Potential risks include a significant drop in polysilicon prices, reduced demand from global buyers due to trade disputes, and rising upstream raw material prices [9] 2. **Quality Concerns**: There are concerns regarding the slower progress in quality upgrades of granular polysilicon, which could affect pricing [9] Additional Important Information - The establishment of the buyout fund is seen as a critical step in addressing the overcapacity issue in the polysilicon market, which has been a concern for investors [1][2] - The report emphasizes the importance of policy support in driving the recovery and consolidation of the solar supply chain in China [4][7]