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].

Market Performance - A-shares opened lower but rebounded, with the ChiNext Index leading the gains [1] - The Shanghai Composite Index closed at 3355.26 points, up 0.38%, with a trading volume of approximately 310.2 billion [1] - The Shenzhen Component Index closed at 10207.71 points, up 1.03%, with a trading volume of approximately 499.4 billion [1] - The ChiNext Index closed at 2031.22 points, up 1.74%, with a trading volume of approximately 238.6 billion [1] Sector Performance - The military industry sector continued to perform strongly, with stocks like Jintongling and Huawu shares hitting the daily limit [1] - AI hardware stocks rebounded, with Wohu Nuclear Materials also hitting the daily limit [1] - The automotive services, insurance, and white goods sectors saw significant gains, while sectors like PEEK materials and fertilizers experienced declines [2] Institutional Insights - Huatai Securities noted that recent government statements regarding "stabilization funds" are positive, suggesting that large-cap stocks will benefit from mid-term capital inflows [3] - Galaxy Securities highlighted a reduction in mortgage loan rates and the introduction of financing support policies, which may lower home purchase thresholds and support housing demand [3] - CITIC Securities indicated that the Federal Reserve is likely to maintain interest rates, with expectations of fewer than two rate cuts this year [3] Policy Developments - The Financial Regulatory Bureau announced the establishment of 74 private equity investment funds to support technology innovation enterprises [4] - The National Development and Reform Commission is working on mechanisms for private enterprises to participate in major national projects, with a total investment scale of approximately 3 trillion yuan in quality projects planned for this year [4] Corporate Actions - Guotai Haitong plans to issue up to 2 billion yuan in technology innovation bonds, with two types of bonds: a 3-year fixed-rate bond and a 10-year fixed-rate bond [5][6]

Summary of Conference Call Records Company: Guankang Technology (观想科技) Key Points: 1. **AI Technology Development**: Guankang Technology focuses on developing specialized edge AI capabilities by integrating software and hardware, leveraging military knowledge to create dedicated models for unmanned equipment and edge computing devices, enabling functions such as situational awareness, path planning, and enemy identification [1][4][6] 2. **Product Line and Cost Efficiency**: The company adheres to a "software-defined hardware, general technology specialization" approach, resulting in a series of products including smart brains, payload units, and power units, which effectively reduce cost-effectiveness ratios and facilitate low-cost R&D and mass production of equipment [4][7] 3. **Financial Projections**: Analyst Bao Xuebo projects the company's net profit for 2024-2026 to be 0.07 billion, 0.95 billion, and 1.44 billion CNY respectively, with year-on-year growth rates of 435.79%, 1261.08%, and 50.73%, leading to corresponding P/E ratios of 552, 41, and 27 [1][4][5] 4. **Market Expansion**: The company is transitioning towards smart equipment and AI, leveraging its military industry experience to expand into civilian markets, achieving breakthroughs in areas such as smart security and emergency response [4][6] 5. **Recent Contracts**: Guankang Technology signed a contract worth 1.51 billion CNY for a project with Beijing University of Posts and Telecommunications, focusing on digital testing platforms and intelligent recognition, and another contract worth 94.16 million CNY for infrastructure development in Yaan [6] Industry: Real Estate Key Points: 1. **Policy Impact on Real Estate**: The central bank's reduction of personal housing provident fund loan rates by 0.25 percentage points is seen as a positive factor for the real estate sector, indicating potential valuation recovery [2][9] 2. **Valuation Bottoming**: Analysts believe that the real estate sector's valuation may have reached a bottom, with some companies expected to see profit improvements in 2025 due to prior impairment provisions and a focus on core cities [2][10] 3. **Sales Performance**: Despite the seasonal downturn in May, sales in the real estate sector are not as weak as expected, suggesting resilience in the market [2][10] 4. **Investment Opportunities**: Analysts recommend focusing on high-quality real estate companies such as China Resources Land and others, while also considering companies with lower valuations and minimal resistance [11][12] 5. **Market Sentiment**: Positive policy signals are expected to provide investment opportunities in the undervalued real estate sector, with a shift in sentiment as companies begin to cancel discount sales strategies [12][13]

Group 1: Current Real Estate Market Situation - The real estate market is experiencing a stark contrast between new home "false prosperity" and a "cliff-like" decline in second-hand homes, with a 7.23% year-on-year drop in average second-hand housing prices across 100 cities in April [4][5][6] - In some cities, new home prices have plummeted significantly, with examples showing a drop from 12,000 yuan per square meter to 4,388 yuan per square meter, indicating severe price reductions and unsold inventory [4][6][7] - The disparity in housing prices between first-tier cities and third- or fourth-tier cities is widening, leading to a significant loss of wealth for many families [6][7] Group 2: Investment Considerations - With declining deposit rates, cash savings are still considered a safer option compared to real estate investments, which have shown a depreciation of 7.23% year-on-year [9][19] - Experts suggest maintaining cash liquidity as a strategy during economic instability, with historical examples from business leaders advocating for reduced debt and increased cash flow [11][19] - The current market conditions indicate a significant decline in first-time homebuyer demand, with a 60% drop in purchasing intent among unmarried individuals over 30 years old [13] Group 3: Policy and Market Confidence - Despite recent policy measures aimed at stimulating the housing market, such as interest rate cuts, market confidence remains low, as evidenced by a surge in new listings following the removal of sales restrictions [14] - The inventory pressure is substantial, with over 10 million vacant homes nationwide, particularly in third- and fourth-tier cities, leading to a lack of upward price pressure [13][14] - The overall sentiment suggests that the era of continuously rising property prices has ended, and cash is viewed as a critical asset for future investment opportunities [19]

全国各省市区的平均房价排名出炉。深刻地反映出我国不同地区在经济发展水平、人口流动趋势、地域资源特色以及政策导向等多方面的复杂差异与鲜明特 征。 在榜单中，广西以 0.59 万/㎡、贵州以 0.52 万/㎡的平均房价处于低位，成为房价最低的梯队成员。 这两个省份相对而言，经济发展水平在全国范围内不算突出，产业结构有待进一步优化升级，人口吸附能力有限，对房地产市场的需求拉动相对较弱，从而 使得房价维持在较为亲民的区间，也让当地居民在住房方面的压力相对较小。 而上海则以 5.3 万/㎡的均价高高在上，独占鳌头。 作为国际化大都市，上海是全球金融、贸易、航运中心之一，拥有海量的高端产业资源、优质的教育医疗配套以及丰富多元的文化娱乐设施。 世界各地的企业与人才纷至沓来，对住房的需求极为旺盛，且高端住宅市场需求强劲，众多豪宅别墅的存在更是拉高了整体房价水平，使其成为全国房价的 标杆与风向标。 这是因为广东地域广阔，除了深圳、广州这两大核心一线城市外，还有众多二三线城市及广大的乡镇地区，这些区域的房价相对较低，拉低了全省的平均水 平。这也反映出广东区域经济发展的不平衡性，在城市与乡村、发达地区与欠发达地区之间存在着明显的房 ...

重点城市二手房成交同比增长 4月，重点城市二手房成交量整体同比延续增长态势。 中指研究院的数据显示，4月，一线城市中，深圳二手住宅成交5733套，同比增长37%；上海二手房成交超2.3万套，同比增长30%；北京二手住宅成交超 1.5万套，同比增长17%。二线城市中，成都、杭州、南宁二手住宅成交套数同比分别增长20%、16%、14%。 4月，重点城市二手房成交量同比普遍增长。 具体来看，一线城市中，深圳二手住宅成交套数同比大增37%，上海同比增长30%，北京同比增长17%，广州同比增长近13%。二线城市中，成都、杭 州、南宁二手住宅成交套数同比分别增长20%、16%、14%。 业内人士认为，4月重点城市二手房交易活跃度持续，驱动行业对后市信心有所回升，5月房地产市场有望延续积极向好。 上海易居房地产研究院副院长严跃进认为，重点城市二手房市场延续去年以来的较好态势，呈现了交易规模继续同比正增长的态势。以上海为例，目前二 手房成交量连续七个月保持较高水平，也突破了荣枯线以上水平，体现了二手房政策到位和市场活跃的特征。 不过，中指研究院高级分析师孟新增指出，4月重点城市二手房市场仍保持较高活跃度，成交同比多保持增长， ...

Investment Rating - The report maintains a positive outlook on the market with a base case index target for MXCN at 67 by the end of 2025, with a preference for sectors such as Energy, IT, and Utilities [36][38]. Core Insights - The report indicates a recovery in the MXCN index, driven by sectors like IT and Healthcare, with expectations of a market reversal by late January 2025 [9][11]. - The report highlights a cautious approach towards Consumer Discretionary and Staples, recommending a rotation into quality laggards and large caps over small and mid-caps [36][38]. - The anticipated GDP growth for China in 2025 is projected at 4.1%, slightly below the consensus of 4.2% [10]. Market & Sector Performance - MXCN sectors performance shows Consumer Discretionary up by 3.2% week-on-week, while Information Technology leads with an 8.3% increase [6]. - The MSCI China index has shown a year-to-date increase of 9.0%, with a notable recovery in sectors impacted by US tariffs [7][12]. Catalyst Calendar - The report outlines key upcoming macroeconomic indicators and sector-specific data releases, including PMIs and housing transactions, which could influence market movements [14]. Consensus Macro Forecasts - The consensus forecasts for China's GDP growth in 2025 are 5.1% for Q1, declining to 3.9% by Q4, indicating a gradual slowdown [16]. Index Targets - The MSCI-China index target for 2025 is set at 71, with a bull case of 80 and a bear case of 70, reflecting a potential upside of 13% from current levels [18]. - The CSI-300 index target for 2025 is projected at 3,787, with a bull case of 4,150, indicating a 10% upside potential [19]. Investment Recommendations - The report recommends overweight positions in Energy, IT, and Utilities, while advising underweight positions in Consumer Discretionary, Materials, and Staples [39]. - A barbell strategy is suggested, focusing on high-yielders and selected thematic plays in Internet and AI sectors [36][38]. Trading Statistics - Recent trading statistics indicate a net outflow of US$796 million from China equities, primarily driven by passive fund outflows, although there has been a positive development with resumed offshore ETF inflows [79][80].

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report highlights a deeper pullback in subscription-based volume and visitor traffic in export-centric cities, with subscription-based secondary sales in approximately 15 monitored cities falling by 7% week-over-week (wow) and 9% in export-reliant cities [1] - Primary markets with the highest export exposure underperformed peers, showing an improvement of only 11% wow compared to 19% and 15% for cities with the least exposure and other peers respectively [1] - Secondary visitor traffic in export-centric cities dropped sharply by 13% wow, indicating a significant decline in market activity [2] Summary by Sections Sales Volume - New homes sales volume increased by 6% wow but decreased by 11% year-over-year (yoy), with tier-1 and Yangtze River Delta (YRD) cities outperforming [5] - Secondary transactions averaged an increase of 11% wow and 4% yoy, despite negative price appreciation expectations from agents and homeowners [5] - Year-to-date (YTD) primary gross floor area (GFA) sold averaged a 1% yoy increase but was down 31% and 12% compared to 2023 and 2022 levels respectively [6] Market Trends - Property sales in around 75 cities suggest that top-100 developers' presales are likely to decline by 4% yoy in April, compared to an 11% decline in March [7] - The GSPC tracker indicates a high-single-digit to teen-level yoy decline in completions for April 2025, with a projected 3% yoy increase for FY25E [7] - New starts are expected to record a high-teens level yoy decline in April, based on land sales trends and cement shipment ratios [7] Visitor Traffic and Sentiment - The latest new home search demand heat index edged up by 0.2% wow, remaining below the levels seen in 1Q25 and post-September 2024 easing [18] - Secondary listing supply in export-reliant cities decreased by 3% wow, while visitor traffic fell by 13% wow, indicating a decline in market engagement [20] Inventory and Valuation - Inventory levels remained flattish week-over-week and decreased by 2.6% from the end of 2024, with inventory months at 26.3 [50] - The report notes that offshore developers are trading at an average 35% discount to end-2025E NAV, while onshore developers are at a 19% discount [63]

Group 1 - The "May Day Good Housing Festival" attracted over 100,000 visitors and showcased more than 50 real estate brands and financial institutions, featuring nearly 100 projects including commercial housing and affordable housing [2][3] - From May 1 to May 5, the city recorded 826 new housing subscriptions, with 317 signed contracts, marking a year-on-year increase of 23.89% [3][4] - The "Old for New" program significantly boosted second-hand housing transactions, with 20,684 viewings leading to 367 transactions, and 63 contracts signed, reflecting a year-on-year growth of 36.96% [4] Group 2 - The hot property "Pengchen Yunzhu" launched 250 residential units, achieving a 92% sales rate on the opening day [3] - The "Old for New" 3.0 subsidy program has seen over 2,000 homeowners apply for the "sell old house" subsidy, contributing to a 19% increase in second-hand housing viewings and a 25% increase in signed contracts [4] - The festival is seen as the kickoff for the "May Home Buying Season," with ongoing promotional policies and services expected to benefit homebuyers [4]

Core Insights - The average price of commercial housing in China is projected to decline by 32% from its historical peak by 2025, with the total number of second-hand homes listed exceeding 120 million [1] - A significant portion of families owning two or more properties (45%) are facing unprecedented asset protection challenges due to the ongoing real estate market downturn [1] Market Dynamics - Since 2022, the domestic housing market has entered a technical bear market, with prices in cities like Langfang halving and Yanjiao experiencing a 58% drop [1] - Even first-tier cities are affected, with prices outside Beijing's Fifth Ring Road falling by 18% from their 2021 peak, and second-hand home prices in suburban Shanghai often below cost [1] Asset Impact - A central bank survey indicates that 45% of families have over 70% of their total assets tied up in real estate, meaning a 10% drop in housing prices results in a 7% decrease in total assets [1] - For a typical family with two properties valued at 5 million yuan each, a price drop to 4 million yuan would lead to a loss of 200,000 yuan in total assets [1] Supply and Demand Imbalance - As of March 2025, major cities in China have recorded unprecedented second-hand home listings, including: - Chongqing: 338,000 units - Wuhan: 196,000 units - Guangzhou: 172,000 units - Beijing: 134,000 units [3] - This supply-demand imbalance has significantly extended transaction cycles, with the average transaction period for second-hand homes reaching 278 days in Q1 2025, an increase of 93 days from 2021 [3] Cost Pressures on Property Owners - Multi-property owners are facing a "triple squeeze" on costs, including: - Rising property management fees, with fees in a mid-range community in Beijing increasing from 2.8 yuan to 4.2 yuan per square meter [5] - Expansion of property tax trials, with rates in Shanghai and Chongqing reaching 0.4% [4] - These challenges exacerbate the survival environment for multi-property owners, intensifying the pressure to protect their assets and necessitating the search for viable strategies to navigate future uncertainties [6]