February 2, 2026 07:11 AM GMT China Chemicals | Asia Pacific A Long Tail Recovery, Not Instant | What's Changed | | | | --- | --- | --- | | Wanhua Chemical (600309.SS) | From | To | | Rating | Overweight | Equal-weight | | The recent segment rally was driven by liquidity rotations, rather | | | | M February 2, 2026 07:11 AM GMT | Morgan Stanley Asia Limited+ | Idea | | --- | --- | --- | | China Chemicals Asia Pacific | Kaylee Xu | | | | Equity Analyst | | | A Long Tail Recovery, Not | Kaylee.Xu@morganstanle ...

January 27, 2026 02:59 PM GMT China Transportation | Asia Pacific Company Visits: Airlines and Express Delivery Managements from express delivery companies see healthy industry volume growth and sustained effects from anti- involution. Airlines' supply chain constrains will remain, supporting the group's up-cycle in 2026 and beyond. Airlines – Up-cycle thesis remains intact: Our meeting with Spring Airlines re- confirmed our view on the industry's up-cycle. Spring's management expects potential disruptions ...

Global Markets Strategy 26 January 2026 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. China Equity Strategy Shenzhen Opportunity Forum takeaways On 20-21 January, the 2026 JPM China Opportunity Forum brought together 100+ companies and 210+ investors. We s ...

Summary of China Solar Industry Conference Call Industry Overview - The conference call focused on the China solar industry, particularly the dynamics of solar cell pricing and profitability trends in January 2026 [1][5][6]. Key Highlights - **Cell Price and Silver Cost Increase**: - There was a significant increase in silver paste prices for solar cells, with increases of 112% for Back-side, 34% for Front-side Busbar, and 46% for Front-side Finger in January 2026. This follows an average increase of 54% in Q4 2025 [5]. - The increase in silver costs has raised production costs for cells/modules by approximately Rmb0.03/W month-over-month, with silver now accounting for about 20% of total module production costs, up from 7% in Q3 2025 and 11% in Q4 2025 [5]. - **Solar Installation Performance**: - China’s solar installations in December 2025 were reported at 40GW, reflecting an 82% month-over-month increase but a 43% year-over-year decrease. The total for FY25 reached 315GW, which is a 14% year-over-year increase, exceeding Goldman Sachs' estimate of 283GW [5][6]. - **Market Demand and Supply Dynamics**: - The supply/demand ratio improved to 129% in January from 139% in December, indicating a slight tightening in the market despite weak transaction volumes and a 20% month-over-month decline in cell production [5][10]. - Producer-side inventory days increased to 62 days in January from 58 days in December, suggesting a buildup of inventory amid weaker demand [5][13]. Pricing Trends - **Price Forecasts**: - For Q1 2026, prices for cells and modules are expected to increase by 31% and 5% respectively, driven by higher silver costs and an export rush ahead of tax rebate removals starting April 1, 2026. However, a retreat of 24% and 8% is anticipated in Q2 2026 due to Tier 1 adoption of cost reduction technologies [6]. - Upstream prices for Poly and Wafer are projected to decline by 11% quarter-over-quarter in Q1 and Q2 2026 due to anti-monopoly measures and seasonal low electricity costs [6]. Sector Outlook - **Regulatory Environment**: - The ongoing "anti-monopoly" regulations and "anti-involution" campaigns are expected to influence industry pricing, aligning with Tier 1 cost reduction progress amid demand weakness in 2026 [6]. - **Investment Recommendations**: - The report suggests a cautious approach towards certain segments, recommending a "Buy" on high-efficiency Tier 1 module players like Longi and a "Neutral" stance on low-cost Tier 1 Poly players like GCL Tech. Conversely, a "Sell" rating is advised for Rod Poly (Daqo ADR/A, Tongwei), Wafer (TZE), Equipment (Shenzhen S.C., Maxwell), and Glass (Flat A/H, Xinyi Solar) [6]. Additional Insights - **Profitability Metrics**: - Cash profitability for cells/modules improved in January, while it deteriorated for glass/film segments. The average cash gross profit margin (GPM) for Tier 1 Poly was reported at 38%, with a notable increase in profitability metrics across various segments [7][9]. - **Market Sentiment**: - The overall sentiment in the solar market remains cautious, with a focus on company-specific cost reduction strategies and the impact of rising silver prices on the industry cost curve [6]. This summary encapsulates the key points discussed during the conference call, providing insights into the current state and future outlook of the China solar industry.

January 26, 2026 08:30 AM GMT China Autos & Shared Mobility | Asia Pacific Can Dealers Benefit from the Anti-involution Campaign? | What's Changed | | | | --- | --- | --- | | Zhongsheng Group Holdings (0881.HK) | From | To | | Price Target | HK$21.00 | HK$18.00 | | China Yongda Automobiles Services (3669.HK) | | | | Price Target | HK$2.30 | HK$1.90 | | China MeiDong Auto Holdings Ltd (1268.HK) | | | | Price Target | HK$2.10 | HK$1.70 | We expect dealers to see new car margin upside from OEM MSRP adjustments ...

Investment Rating - The report indicates a positive investment outlook for the Asia Pacific ex-Japan region, with 90% of investors expecting equities to rise in the next 12 months [2][17]. Core Insights - The global growth forecast is improving, with APAC ex-Japan economic prospects reaching an 11-month high, and over half of respondents anticipating a stronger Japanese economy in the next year [1][3]. - Investor sentiment towards China is notably optimistic, with a net 8% expecting a stronger economy, a significant shift from previous expectations of weakness [4][26]. - Japan remains a favored market, with 7 in 8 panelists expecting positive returns, driven by corporate governance reforms and policy normalization [3][40]. Summary by Sections Economic Outlook - The global growth forecast is gaining momentum, particularly in the APAC ex-Japan region, which has reached an 11-month high [1]. - China's growth outlook is improving, with a notable increase in investor sentiment, as indicated by the China Risk-Love indicator reaching its highest level since April 2021 [4][26]. Market Sentiment - 90% of investors anticipate a rise in APAC ex-Japan equities over the next year, with return expectations at their highest since February 2023 [2][17]. - Japan is viewed positively, with virtually no investors expecting a weaker economy in the next 12 months [3][38]. Sector Preferences - Semiconductors and banks are highlighted as the most favored sectors in Japan, benefiting from higher interest rates and ongoing technological advancements [47]. - In the broader Asia Pacific ex-Japan region, semiconductors, tech hardware, and financial services are the most preferred sectors, while energy and consumer staples are out of favor [52]. Investment Themes - Key investment themes include AI, anti-involution, and corporate value-up programs in Korea, reflecting a focus on innovation and corporate governance [5][60]. - In China, the focus is on AI and semiconductors, while cyclicals and green economy themes have lost traction [54].

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **solar and battery products** industry in China, particularly regarding the changes in **value-added tax (VAT) rebates** for exports of these products [1][2][3]. Core Insights and Arguments - **Termination of VAT Rebates**: The Chinese government announced the complete termination of VAT rebates for solar products by **April 1, 2026**, and a phased reduction for battery products, which will see rebates lowered to **6%** on the same date and completely canceled by **January 1, 2027** [2][3]. - **Reasons for the Policy Change**: This decision is driven by several factors: - An ongoing **anti-involution campaign** aimed at curbing excessive price competition and overcapacity in the manufacturing sector [4]. - A significant **trade surplus** exceeding **USD 1.1 trillion** in 2025, prompting the government to take measures to manage this surplus without relying on currency appreciation [1][3]. - **Impact on Exports**: The termination of VAT rebates is expected to lead to a **front-loading of exports** for solar products in Q1 2026 and for batteries in the second half of 2026 [1][13]. Additional Important Information - **Export Performance**: In 2025, China's solar panel exports increased by **73.6%** in volume but decreased by **9.6%** in value, indicating a significant gap between volume and value growth [6]. Battery exports also showed growth, with lithium-ion battery shipments increasing by **25.6%** in value and **19.3%** in volume [6]. - **Investment Trends**: The manufacturing sector, particularly in electrical machinery and equipment, has seen a decline in fixed asset investment growth, dropping from **-8.0%** in Q2 to **-12.2%** in Q3 2025 [5]. This reflects the adverse effects of the anti-involution campaign on investment levels. - **Trade Tensions**: The ongoing trade tensions, particularly with the EU, may lead to increased tariffs and trade barriers against Chinese goods, as highlighted by the potential for a "second China shock" [12]. Conclusion - The changes in VAT rebates for solar and battery products represent a significant shift in China's trade policy, aimed at addressing overcapacity and trade surplus issues while potentially impacting export dynamics and investment in the sector [1][3][4][12].

Summary of Key Points from the Conference Call Industry Overview - **Economic Outlook for China**: The economy is projected to experience lukewarm growth with real GDP growth estimates of 4.5% for 2026, down from 4.9% in 2025, and expected to rise slightly to 4.6% in 2027 [3][3][3] - **Consumption Trends**: Consumption growth is forecasted to slow to 4.4% in 2026 from 4.8% in 2025, indicating a potential decline in consumer spending as subsidy effects diminish [3][3][3] - **Investment Dynamics**: Gross fixed capital formation is expected to increase to 3.4% in 2026, suggesting a recovery in investment activities [3][3][3] Key Economic Indicators - **Current Account Surplus**: Projected to rise from 2.9% of GDP in 2025 to 3.1% in 2026, indicating a strengthening of external financial position [3][3][3] - **Trade Surplus**: Expected to remain stable at 4.7% of GDP in 2025 and 2026, reflecting consistent export performance [3][3][3] - **Inflation and Monetary Policy**: CPI is anticipated to increase slightly to 0.4% in 2026, with the 10-year government bond yield remaining stable at 1.70% [3][3][3] Sector Performance - **Property Market**: Property sales have weakened, contributing to a slowdown in retail sales as the effects of subsidies wear off [4][4][4] - **Innovation and R&D**: China's R&D expenditure is catching up to the US in PPP terms, highlighting the growing importance of innovation in the economy [19][19][19] - **Sector Valuation**: Valuations across various sectors remain undemanding, with MSCI China forward P/E ratios indicating potential for growth [33][33][33] Investment Opportunities - **Institutional Inflows**: Continued inflows from domestic institutional investors, including insurance and mutual funds, are expected to support equity markets [41][41][41] - **Positive Catalysts**: Anticipated positive catalysts in the first half of 2026, including insurance fund allocations, could drive market performance [43][43][43] - **Earnings Growth**: EPS growth is projected at 10% for FY26, which is seen as a critical driver for market performance [51][51][51] Risks and Challenges - **Geopolitical Risks**: Ongoing geopolitical tensions remain a risk factor, although the market appears to be more desensitized compared to previous years [65][65][65] - **Property Market Hard Landing**: A potential hard landing in the property market poses significant risks to the overall economy [95][95][95] - **Capital Exodus**: Concerns over capital flight associated with currency depreciation and slow structural reforms could impact market stability [95][95][95] Conclusion - The outlook for the Chinese economy in 2026 suggests a cautious approach, with potential growth tempered by slowing consumption and ongoing risks in the property sector. However, institutional inflows and a focus on innovation present opportunities for investors.

Summary of China Cosmetics Sector Conference Call Industry Overview - The China cosmetics sector is expected to experience a reset for higher-quality growth in 2026, moving away from reliance on high-cost Key Opinion Leaders (KOLs) and focusing on popular core SKUs. This shift has led to a contraction in Net Profit Margin (NPM) due to deleveraging impacts, despite improvements in Return on Investment (ROI) [1][2]. Key Trends and Insights - **Consumer Acquisition Costs**: Monitoring new consumer acquisition costs will be critical, especially as channel migration benefits diminish and the ingredient cycle remains ambiguous. Anti-involution policies will also play a significant role [1]. - **Branding Strategy**: Branding is anticipated to be the most effective strategy for consumer engagement and new product launches in 2026. Companies with high repurchase rates and cost-efficient omni-channel strategies are better positioned for success [1][2]. - **Market Dynamics**: The cosmetics market is expected to grow at a normalized rate, with growth projected at less than 1x GDP growth. The market is forecasted to see a 2.1% increase in beauty spending in 2026, with a mix of onshore and offshore market performance [17][18]. Company-Specific Insights - **Mao Geping Cosmetics (MGP)**: Upgraded from Neutral to Buy with a target price increase from HK$89 to HK$105, reflecting a 27% upside. The company is noted for strong branding and a balanced channel presence, with a forecasted sales and net income CAGR of 23% and 22% from 2025 to 2027, respectively [2][9]. - **Giant Biogene**: Maintained as Buy, with a target price lowered from HK$71 to HK$46, indicating a 36% upside. The company is expected to recover with new skincare products and a focus on medical aesthetics, projecting sequential growth of -8%/+12%/+17% YoY for 1H26E/2H26E/2027E [2][9]. - **Shanghai Jahwa**: Target price reduced from RMB 31 to RMB 28, with a 22% upside. The company is on a turnaround trajectory with improving margins and cash flow [2][9]. - **Proya Cosmetics**: Remains Neutral as the company is expected to moderate organic growth while awaiting more execution on white space exploration [2][9]. - **Botanee Biotech**: Neutral rating with early signs of a potential turnaround but lacking clear growth drivers [2][9]. - **Bloomage Biotech**: Maintained as Sell due to downside risks in skincare and muted growth in medical aesthetics amid a mature product cycle [2][9]. Market Performance and Projections - **E-commerce Trends**: Tmall is expected to maintain strong growth momentum, supported by anti-involution measures. Douyin's performance has been softer than expected, with a significant decline in KOL channel performance [19][21]. - **Sales Growth Expectations**: The cosmetics sector is projected to see sustained GMV growth on Tmall, while Douyin is expected to experience a narrowing gap in growth rates compared to Tmall [20][21]. Conclusion - The China cosmetics sector is poised for a shift towards higher-quality growth in 2026, with branding and strategic channel management becoming increasingly important. Companies that adapt to these changes and focus on core products are likely to outperform in the evolving market landscape [1][2][19].

Summary of Key Points from the Conference Call Industry Overview - **Focus**: The conference call primarily discusses the outlook for the Chinese equity market in 2026, with insights from Goldman Sachs Global Investment Research. Economic Forecasts - **GDP Growth**: China’s real GDP is projected to grow by **4.8% in 2026**, down from **5.0% in 2025** [12][36] - **Inflation**: CPI is expected to be **0.6%** in 2026, with a core CPI of **1.0%** [12] - **Consumption Growth**: Household consumption is forecasted to grow by **4.5%** in 2026 [12] Market Performance Expectations - **Price Returns**: Expected price returns for MSCI China and CSI 300 are **20%** and **12%**, respectively, by the end of 2026 [67] - **Earnings Growth**: EPS growth for MSCI China and CSI 300 is projected at **14%** for both indices in 2026 [33][36] Sector Allocations - **Overweight Sectors**: Offshore China, Media, Retailing, Insurance, Tech Hardware, and Materials are identified as overweight sectors [3] - **Market-Weight Sectors**: Singapore, Japan, Taiwan, and Hong Kong are categorized as market-weight sectors [4] - **Underweight Sectors**: Malaysia, Thailand, and Australia are underweight sectors, particularly in Consumer Durables, Real Estate, and Telecom [5] Investment Themes - **Shift to Profit-Driven Returns**: The market is transitioning from PE-led to profit-driven returns, with a focus on sustainable growth [7] - **Supportive Policies**: The need for supportive policies and reforms to boost consumption and infrastructure investment is emphasized [16][19] Capital Flows - **Net Buying Forecast**: Anticipated net buying of **US$200 billion** from Northbound and **US$20 billion** from Southbound flows in 2026 [55] - **Domestic Capital Migration**: More than **Rmb3 trillion** of new domestic capital is expected to flow into the stock market in 2026 [60] Valuation Insights - **Target Valuations**: The target forward P/E for MSCI China is set at **13x** by the end of 2026, indicating a potential for valuation re-rating [43] - **Current Valuation Levels**: Most sectors are trading at or below average valuation levels, suggesting potential upside [46] Sector-Specific Insights - **Technology and Consumer Sectors**: The TMT sector is expected to lead earnings growth, while defensive sectors like Real Estate and Utilities are lagging [38][41] - **Cyclical and Consumer Industries**: These sectors are well-positioned for policy support under the 15th Five-Year Plan [77] Risks and Considerations - **Geopolitical Risks**: The impact of US tariffs and geopolitical tensions on earnings growth is acknowledged, with a 30% effective US tariff rate potentially supporting mid-teen earnings growth [36] - **Market Sentiment**: The current sentiment among institutional investors remains cautious, with allocations to Chinese equities still below historical averages [58] Conclusion - The outlook for the Chinese equity market in 2026 is cautiously optimistic, driven by expected GDP growth, supportive policies, and a shift towards profit-driven returns. However, geopolitical risks and market sentiment remain critical factors to monitor.