Investment Rating - The report maintains an Overweight rating on China equity, with a raised 12-month index target for MSCI China and CSI300 to 78 and 4,400, implying potential returns of 7% and 15% respectively [1][31]. Core Insights - Despite trade frictions with the US, China financial assets have shown resilience, with the Rmb appreciating against the USD by 1.7% in the past month and Chinese government bonds reaching all-time highs [1][2]. - The report highlights a targeted monetary easing package from the PBoC, NFRA, and CSRC, which includes 23 measures aimed at supporting the real economy and financial markets [6][8]. - The effective US tariff rate on Chinese imports is expected to decrease from around 160% to approximately 60%, which has led to an upward revision of the 2025 EPS growth estimate for MSCI China from 4% to 6% [1][10][13]. Summary by Sections Market Performance - China equity (MSCI China) has recovered 12% year-to-date and almost fully recovered from a 13% drawdown post-Liberation Day [1][3]. - Southbound flows to HK-listed equities have reached US$80 billion year-to-date, three times larger than the same period last year [19][20]. Monetary Policy - The recent monetary easing measures are seen as a positive surprise, aimed at improving liquidity and reducing funding costs, with a focus on demand-side support [6][8]. - Specific measures include a 50 basis point RRR cut providing approximately Rmb1 trillion in liquidity and targeted assistance for SMEs [8][10]. Economic Indicators - Hard data remains robust, with property sales in primary markets rising 26% year-over-year during the Labor Day holidays, particularly in tier-1 and tier-2 cities [10][11]. - However, soft data indicates signs of moderation, with declining trends in PMIs and cargo shipments [10][11]. Earnings Forecast - The report nudges up the 2025 EPS growth estimate for MSCI China to 6%, reflecting expectations of a lower effective US tariff rate and a stronger Rmb [10][13]. - The revised EPS integer forecast for 2026 remains 8% below the prevailing sell-side consensus [10]. Sector Focus - The report emphasizes a focus on sector and thematic alpha, particularly in domestic stimulus beneficiaries, select AI proxies, and local government spending beneficiaries [1][37]. - Banks and Real Estate have been upgraded to Overweight to enhance domestic exposure and sensitivity to policy easing [37][40].

Core Viewpoint - The ongoing tariff situation has negatively impacted stock performance, including major tech companies, with the Roundhill Magnificent Seven ETF down nearly 18% this year, prompting investors to seek cheaper stocks [1] Group 1: Apple Inc. - Apple is significantly affected by tariffs, with over 80% of its products manufactured in China, and could see iPhone prices rise to $3,500 if production shifts to the U.S. [3] - The current tariff rate on China has been increased to 145%, but there are indications from the White House of a potential trade deal, with temporary exemptions for electronics [4][6] - Analysts predict a 10% decline in Apple's earnings for 2025 and 2026, with a worst-case scenario of a 15% to 20% drop if no trade deal is reached, yet the long-term outlook remains bullish with a price target of approximately $238, indicating an 18% upside [5][6] Group 2: Meta Platforms - Meta is less affected by supply chain issues compared to Apple, as it does not produce tangible goods, but could still face challenges from an economic slowdown due to tariffs impacting advertising budgets [7] - Despite potential recession impacts, Meta is viewed as a resilient advertising platform, with 42 out of 46 analysts rating it a buy and an average price target of around $726, suggesting a 39% upside [8] - Meta is recognized as a significant beneficiary of AI advancements, enhancing its advertising effectiveness and revenue per user, trading at about 20.8 times forward earnings, close to its five-year average [9][10]

Core Viewpoint - Apple's stock has experienced a significant decline due to new tariffs imposed by President Trump, with shares trading over 5.6% lower and a total drop of over 19% in the last five trading days [1][4]. Group 1: Analyst Insights - Wedbush analyst Dan Ives has lowered his price target for Apple from $325 to $250 while maintaining an outperform rating, indicating a cautious outlook amidst the tariff situation [2]. - Ives believes that the tariffs will severely impact the U.S. tech industry, stating that it could set back the sector by a decade, with China emerging as the primary beneficiary [2][3]. - Apple is particularly vulnerable due to its heavy reliance on Chinese production, with 90% of iPhones and over half of its Mac computers produced in China [3]. Group 2: Manufacturing and Supply Chain Concerns - The feasibility of relocating Apple's manufacturing to the U.S. is questioned, with estimates suggesting it would take three years and approximately $30 billion to shift just 10% of production without causing significant disruptions [3]. - The company’s best chance for relief from tariffs would be to secure an exemption from the Trump administration, similar to what was granted during his first term, although there are no indications of such a move currently [4]. Group 3: Long-term Outlook - While the tariffs are not expected to lead to Apple's downfall, they are likely to cause considerable earnings pressure in the near term [5]. - Long-term investors are encouraged to consider buying the stock, but should be prepared for significant volatility in the short term [5].

Group 1: Berkshire Hathaway's Performance and Strategy - In 2024, Berkshire Hathaway's stock performed well, with class B shares generating a 27% return, outperforming the broader market's 23% return [1] - Despite strong stock performance, Berkshire hoarded cash, was a net seller of stocks, and sold significant portions of its holdings in Apple and Bank of America, indicating a belief that the market is overvalued [2][5] - The combined positions in Apple and Bank of America accounted for 39% of Berkshire's portfolio at the end of 2024, raising questions about the company's future plans for these investments [5] Group 2: Investment in Apple - Berkshire first invested in Apple in 2016, building its position to around 40% of its $296 billion portfolio, with significant purchases made when Apple shares were below $50, now trading at $240 [3] - The decision to sell parts of the Apple position may reflect concerns about a potential market correction or economic downturn [6] Group 3: Investment in Bank of America - Berkshire invested $5 billion in Bank of America in 2011, acquiring preferred stock with a 6% annual dividend and warrants for 700 million shares at a strike price of $7.14, with the stock currently trading at about $44 [4] - Similar to Apple, the selling of Bank of America shares may indicate a strategy to realize profits amid market uncertainties [6] Group 4: American Express Investment - Berkshire has a long-standing relationship with American Express, first investing in 1991 and holding approximately 151.6 million shares by the end of 2024, which has not been sold in nearly 27 years [7][8][12] - American Express represents about 15% of Berkshire's portfolio and is unique due to its strong brand and credit card network, which provides a competitive moat [9][10][11]