11 August 2025 | 5:00AM EDT Americas Transportation: US Tariff Impact Tracker - Still Waiting On Peak Clarity Post Tariff Implementations US Tariff Impact Tracker – Laden vessels from China to USA dropped sequentially by 4% and were down 19% on YoY basis. We think the generally soft pattern could persist through mid-August based on Port of LA data. Ramifications from the recent tariff related implementations and magnitudes have yet to play out -but the next few weeks could be telling in terms of shipper rea ...

Monetary Policy - Vietnam's central bank is prepared to implement measures to control inflation and foster economic growth [1] Economic Impact - The central bank cautions about the potential effects of increased US tariffs on Vietnam's economy and its currency [1]

Inflation & Monetary Policy - The ECB believes it is currently in a good place regarding inflation, but there is no room for complacency as risks are two-sided [1] - The ECB's projection indicates that inflation is likely to be below target for 18 months, requiring vigilance to prevent it from becoming persistent [1][2][5] - The ECB is not committed to any particular rate buffer and will make decisions based on data dependency and meeting-by-meeting analysis [3] - The ECB is closely monitoring exchange rate developments, but the exchange rate is not a positive target; the mandate is price stability [5] - The appreciation of the euro has helped in reaching the 2% inflation target, but its persistence could affect the competitiveness of European export industries [6][8] Economic Outlook & Risks - Geopolitical tensions, the trade war, and artificial intelligence are significant factors influencing economic decisions [4] - The trade war's overall result is likely to increase inflation pressures in the US while dampening inflation in Europe due to a more subdued growth outlook [11][12] - The outcome of trade negotiations will impact the trajectory for the eurozone economy [9] Euro as a Reserve Currency - The Eurozone has stronger confidence in Europe and aims to turn this into concrete policy measures to support European industrial competitiveness and productivity growth [13][14] - The euro is already the number two reserve currency in the world and has real chances to become more important, potentially leading to structurally lower interest rates [15][16] - The Eurozone is willing to share some of the "exorbitant burden" of the international reserve currency currently held by the US dollar [16][17]

President Donald Trump said he has three or four people in mind to succeed Federal Reserve Chair Jerome Powell when his term expires next year. “I know within three or four people,” Trump said Wednesday during a press conference at The Hague, where he is attending the NATO summit. “I mean he goes out pretty soon, fortunately, because I think he’s terrible.” Trump did not name his potential replacements for the central banker nor did he lay out a timeline for a decision. Powell’s term as chair ends in May 20 ...

Investment Rating - The report does not explicitly state an investment rating for the transportation industry or specific companies within it. Core Insights - The report indicates a potential surge in freight volumes from China to the US, driven by expected increases in imports at the Port of Los Angeles, with vessel traffic projected to rise by 6% and TEUs by 39% in the coming weeks [3][4][5] - Trade uncertainty remains high due to recent court involvement over tariffs, which could impact inflation, consumer spending, and global freight flows [2][7] - The report outlines three potential scenarios for trade dynamics in 2025, with a focus on the implications of a 90-day tariff pause with China [10][11][12] Summary by Sections Tariff Impact and Freight Trends - The report tracks high-frequency data to assess the ongoing impact of tariffs on global supply chains, noting that while there has been a recent decline in freight volumes from China, a rebound is anticipated [5][6][14] - Container rates have shown volatility, with a recent uptick followed by flattening, indicating potential shifts in demand and supply dynamics [15][38] Trade Volume Analysis - Year-over-year (YoY) comparisons show a significant drop in laden container vessels from China to the US, with a decrease of 37% YoY and TEUs down by 34% YoY [22][14] - The report estimates that April saw an increase of approximately $4 billion in imports compared to the previous year, while May experienced a decline of about $3 billion [4][61] Future Scenarios and Economic Implications - The report presents two broad scenarios for 2025: a pull-forward surge in activity or a continued slowdown due to uncertainty, impacting inventory levels and freight demand [7][11] - Potential outcomes include a strong second half of 2025 if consumer demand rebounds or a bear case scenario if economic conditions worsen [12][15] Company-Specific Insights - Companies such as FedEx, UPS, and freight forwarders like Expeditors International and C.H. Robinson are highlighted as potential beneficiaries of increased freight activity during periods of volatility [15][85] - The report notes that intermodal traffic has declined by 5% YoY, reflecting ongoing challenges in the transportation sector [47][15]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The ongoing impact of tariffs is significantly affecting global freight flows, with a notable shift in sentiment regarding trade with China [1] - A resurgence in trade with China is anticipated, particularly in retail and consumer goods, as shippers prepare for back-to-school and peak season [1] - Trade uncertainty continues to keep shippers in a cautious 'wait and see' mode, particularly regarding the impact of 30% tariffs on demand [4][10] Summary by Sections Weekly Data Observations - Year-over-year (YoY) laden container vessels from China to the US have decreased by -11.1%, showing a sequential increase of approximately 6% from the previous week [15] - TEU imports into the Port of Los Angeles are expected to surge by 16% sequentially next week, but forecasts indicate a potential drop of -41% in vessels two weeks out [4][10] - The report highlights the volatility of weekly data, suggesting that trends should be assessed over a multi-week basis [7] Trade Scenarios for 2025 - Two potential scenarios for 2025 are identified: a surge in pull-forward activity ahead of a 90-day tariff pause, or a slowdown in orders due to uncertainty [8] - The report suggests a shift towards the first scenario, complicating predictions for transport volumes and earnings [9] Container and TEU Trends - TEUs from China to the US have dropped to -7.1% YoY, improving from -17.5% the previous week, indicating a pause in activity after a surge in April [23] - The report notes that container rates remain flat despite expected demand increases from China, possibly due to an oversupply of ships [11] Port Activity and Freight Rates - Planned TEUs into the Port of Los Angeles were down -14% YoY, with forecasts indicating a sharp increase of 57% YoY next week, followed by a drop of -35% [42] - The report indicates that intermodal traffic on the West Coast was up 4% on average, reflecting front-loaded traffic from earlier weeks [51] Inventory and Economic Indicators - The Logistics Managers Index (LMI) shows upstream inventory expansion slowing to 57.6 in April from 58.9 in March, while downstream inventory expansion also slowed significantly [74]

Investment Rating - The industry view for China's financial sector is rated as Attractive [4] Core Insights - China's banks have sufficient capacity to absorb potential risks from increased US tariffs, with stable earnings and dividends expected to support share performance [1][12] - The potential industrial non-performing loan (NPL) ratio is forecasted to rise to 10-11% from 8.4% at the end of 2024 due to tariff impacts [15][20] - The analysis indicates that approximately 4% of total loans, primarily export-related credits, are exposed to tariff risks, with electronics and electrical equipment being the most affected sectors [10][12] Summary by Sections Financial Stability - Major Chinese banks are expected to maintain stable earnings and dividends despite potential delays in net interest margin (NIM) and fee income recovery [1][58] - The banking sector has been digesting over RMB 3 trillion of total NPLs annually, with a consistent provision charge of around RMB 1.3 trillion [18][19] Risk Assessment - The incremental NPL from higher tariffs could be 2-3% for industrial loans, translating to an increase of 40-60 basis points in total loans [7][12] - The forecast suggests that if tariffs affect one-third of export-oriented manufacturing credits, the cumulative industrial NPL ratio could reach 15-16% [20][22] Sector-Specific Insights - The electronics sector accounts for 22% of exports to the US, while apparel and furniture have higher revenue exposure, indicating varying levels of risk across sectors [10][11] - Continued capital expenditure rationalization in the industrial sector is expected to ease some risks associated with industrial loans [33][37] Market Dynamics - The ongoing tariff dynamics are anticipated to create uncertainties in the A-share market, affecting both fundamentals and investor sentiment [58] - A shift in preference back to defensive banks from insurance is noted, reflecting market volatility and the need for stable earnings [56][58]

Investment Rating - The report maintains a cautious outlook on the fiscal situation in China, expecting further fiscal easing ahead due to ongoing economic challenges [1][9]. Core Insights - Fiscal revenue growth improved to +0.3% year-on-year in March from -1.6% in January-February, driven by stronger-than-expected activity data [2][5]. - Fiscal expenditure growth rose to +5.7% year-on-year in March from +3.4% in January-February, primarily due to increased spending in energy saving, environmental protection, and agriculture [6]. - The ongoing property downturn continues to negatively impact local government funding, with land sales revenue declining by -16.3% year-on-year in March [7][8]. Summary by Sections Fiscal Revenue and Expenditure - On-budget fiscal revenue growth was +0.3% year-on-year in March, a recovery from -1.6% in January-February, with tax revenue contraction narrowing to -2.2% [2][5]. - Fiscal expenditure growth increased to +5.7% year-on-year in March, up from +3.4% in January-February, driven by specific sectors [6]. Property Sector Impact - Property-related government revenue remained weak, with land sales revenue down -16.3% year-on-year in March, indicating continued pressure from the property market [7][8]. - The contraction in property-related tax revenue narrowed to -0.1% in March from -11.4% in January-February, suggesting some stabilization [7]. Augmented Fiscal Deficit (AFD) - The AFD metric narrowed to -10.9% of GDP in March from -11.6% in February on a 3-month moving average basis, while it widened slightly on a 12-month moving average basis [3][8]. - The forecast for the AFD metric is expected to widen by 4.1 percentage points of GDP to 14.5% in 2025, indicating a shift in fiscal policy from a growth drag to a potential driver [9].

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Asia utilities and energy sector**, highlighting the resilience of companies in this space against US tariffs, particularly in Hong Kong and Mainland China [2][19]. Core Insights - **Hong Kong Utilities**: Companies like CLP (2 HK, Buy) and CKI (1038 HK, Buy) are expected to maintain strong cash flows and shareholder returns due to their regulated business nature and predictable cash flows, despite macroeconomic uncertainties [3][13]. - **Mainland China Utilities**: Gas utilities are noted for their resilience, with companies like China Gas (384 HK, Hold) and BEH (392 HK, Buy) showing less exposure to industrial demand. The impact of US tariffs is minimal, with crude oil and LNG imports from the US accounting for only 2% and 5% of total imports, respectively [4][19]. - **ASEAN and India Utilities**: SCI (SCI SP, Buy) and NTPC (NTPC IN, Hold) are highlighted for their defensive characteristics against trade policies and macroeconomic risks [5][29]. Investment Recommendations - **Preferred Stocks**: The report lists six preferred stocks rated as Buy: CLP, CKI, Yangtze, Longyuan, SCI, and Hanwha Solutions, with no changes to target prices [11]. - **Valuation Metrics**: The report provides detailed valuation metrics for various companies, including target prices and expected upside percentages. For instance, CLP has a target price of HKD78.00, implying a 22.3% upside [35]. Risks and Challenges - **Oil and Gas Sector**: The report notes that the bearish expectations on oil prices could negatively impact earnings for companies like CNOOC (883 HK, Buy) and PetroChina (857 HK, Buy) [30]. - **Trade Policy Impacts**: The solar supply chain is under pressure due to US tariffs, particularly affecting Chinese manufacturers, while Korean suppliers like Hanwha are expected to outperform [6][31]. Additional Insights - **Cash Flow Resilience**: Gas utilities are highlighted for their strong cash flows and ability to maintain dividends, with BEH and CGH noted for their dividend policies [22][23]. - **Market Dynamics**: The report emphasizes that Hong Kong utilities have shown consistent outperformance against market risks, supported by favorable correlations with equity risk premiums and UST yields [3][13]. Conclusion - The Asia utilities and energy sector is positioned defensively against trade risks, with specific companies demonstrating strong fundamentals and cash flow resilience. Investment opportunities are identified in both Hong Kong and Mainland China utilities, as well as in select ASEAN and Indian companies.