Macro Insights - The US March CPI data was weaker than expected, with core CPI month-on-month dropping from 0.23% in February to 0.06%, and year-on-year at 2.8%, below the expected 3.0% [2] - The overall CPI month-on-month fell from 0.22% in February to -0.05%, with year-on-year CPI decreasing to 2.4%, both below expectations [2] - Despite the cooling inflation in March, market reactions were muted due to ongoing concerns about tariffs and their impacts, with little change in Fed rate cut expectations [2] Tariff Policy Analysis - On April 9, Trump announced a 90-day suspension of the reciprocal tariff plan, while imposing a 10% tariff on countries outside China, Mexico, and Canada, and increasing the reciprocal tariff on China to 145% [3] - Tariffs are expected to remain a frequently adjusted tool in Trump's negotiations, with potential for further increases against countries perceived as unfavorable [3] - The market may gradually become desensitized to tariff policy changes, with uncertainty becoming a new norm [3] Energy Price Impact - In March, China's CPI was -0.1% year-on-year, lower than the expected 0%, while PPI was -2.5%, also below expectations [4] - The decline in energy prices has contributed to the downward pressure on PPI, indicating a broader economic impact [4] Fixed Income Market Trends - The 10-year US Treasury yield rose sharply from 4.0% to around 4.5%, despite weakening economic fundamentals [5] - The bond market's significant adjustment occurred without drastic changes in macroeconomic data, raising investor concerns [6] Energy Sector Developments - The National Development and Reform Commission released a plan for upgrading coal power plants to enhance flexibility, indicating a market potential of 100-200 billion yuan annually [9] - Companies like Dongfang Electric are recommended due to their involvement in this transition [9] Aviation and Low-altitude Economy - The low-altitude economy is seen as a key area for investment, with potential market space reaching trillions, driven by regulatory changes and advancements in eVTOL technology [10] Company-Specific Insights - Chongqing Bank is covered for the first time with a buy/hold rating, targeting a PB of 0.70/0.47, benefiting from the Chengdu-Chongqing economic circle [12] - Anta Sports reported strong Q1 performance with retail growth across brands, maintaining a buy rating due to competitive advantages [13] - Yutong Heavy Industries showed a 77% increase in new energy vehicle sales, with a robust cash flow supporting its growth outlook [13] - Pinggao Electric is expected to see significant profit growth due to high voltage business expansion, with a buy rating maintained [17] - Wanfu Biology's international business led to a 10.9% revenue increase, with a buy rating supported by stable cash flow and margin improvements [29]

Investment Rating - The report maintains a positive outlook on investment opportunities related to the "Belt and Road Initiative," "Western Development," and the "New Western Land-Sea Corridor" [6][14]. Core Insights - The report emphasizes the importance of the "Belt and Road Initiative" and its potential to strengthen investment rhythms, particularly in infrastructure, resource development, and energy sectors [8][12]. - The construction of the Pinglu Canal in Guangxi is highlighted as a key project that will enhance trade routes and support the dual circulation strategy [11]. - The report identifies significant investment opportunities in the western regions of China, particularly in Xinjiang, Tibet, Sichuan, and Guangxi, focusing on coal chemical projects and hydropower infrastructure [12][14]. - The report notes that domestic infrastructure demand is expected to support cement prices, with recent price increases indicating a potential upward trend in profitability [5][13]. Summary by Sections Belt and Road Initiative - Since the proposal of the "Belt and Road Initiative" in 2013, nearly 160 countries have signed agreements, with significant investment flows observed in Africa [2][9]. - Investment focus areas include infrastructure, resource development, and digital economy, with companies like Huaxin Cement and Keda Manufacturing expanding their overseas operations [10][12]. Pinglu Canal and Western Land-Sea Corridor - The Pinglu Canal is projected to be completed by 2026 and is expected to facilitate trade and logistics, enhancing the economic landscape of the Guangxi region [11]. - The North Bay Port is anticipated to benefit from increased capacity and trade routes once the canal is operational [11]. Western Development - Xinjiang's coal chemical industry is projected to attract investments of up to 631.8 billion yuan, with several companies positioned to capitalize on this growth [12][14]. - Infrastructure projects in Tibet and Sichuan are also highlighted, with ongoing investments in hydropower and transportation expected to drive regional development [12][14]. Cement Demand and Pricing - Recent cement price increases in various regions indicate a potential recovery in the market, supported by domestic infrastructure projects [5][13]. - The report suggests that the cement industry may see improved profitability due to effective supply management and increased demand from infrastructure investments [5][13].

Group 1 - The manufacturing PMI for March increased to 50.5%, up 0.3 percentage points month-on-month, driven by a recovery in both supply and demand [12][25] - The non-manufacturing PMI recorded 50.8%, up 0.4 percentage points month-on-month, although it showed a downward trend over three months [12][25] - New orders index rose to 51.8%, up 0.7 percentage points month-on-month, indicating a recovery in demand, particularly in TMT and general/specialized equipment sectors [14][21] Group 2 - In the information technology sector, the Philadelphia Semiconductor Index decreased by 8.13% to 4282.46 points, while the DXI Index increased by 4.21% to 55171.39 points [29][30] - DDR5 DRAM prices increased by 2.32% to $5.33, with 8GB DDR4 DRAM prices rising by 5.45% to $1.65 [31] Group 3 - In the midstream manufacturing sector, sales of major engineering machinery improved year-on-year in February, while heavy truck sales turned negative in March [25][28] - The solar power installation capacity in February showed a rolling year-on-year increase, indicating growth in the renewable energy sector [28] Group 4 - In the consumer demand sector, the sales of home appliances showed a month-on-month increase, while the prices of live pigs and sugar rose [25][28] - The film box office revenue saw a decline in the ten-day average, although it increased year-on-year since the beginning of the year [28] Group 5 - In the resource sector, the national cement price index increased, while the prices of rebar and steel billets decreased [28] - Brent crude oil prices rose by 5.18%, indicating upward pressure on energy costs [28] Group 6 - In the financial real estate sector, the land transaction premium rate and the transaction area of commercial housing increased, while the index for second-hand housing listings decreased [28] - The SHIBOR rates for 1-week and 2-week periods decreased, indicating a tightening in the money market [28] Group 7 - The public utility sector saw an increase in natural gas prices, while the average daily power generation of key power plants showed a widening year-on-year decline [28]

Investment Rating - The report maintains a positive outlook for the market in the next 3 to 6 months, indicating an early stage of asset revaluation and gradual stabilization of fundamentals [3][8]. Core Insights - Economic data for January-February 2025 shows a stable start, with a year-on-year growth of 4% in retail sales, driven by online channels [3][4]. - The report highlights a recovery in the home furnishing sector starting from early March, with key recommended companies including Gujia, Xilinmen, and Sophia [3][15]. - The technology growth sectors, particularly in computing power, cloud computing, and AI applications, are identified as key investment themes [3][8]. - The bond market is expected to present trading opportunities due to anticipated monetary policy easing after the second quarter [3][10]. - The commodity market is experiencing a mild recovery, with a strong outlook for non-ferrous metals and a bearish view on black metals [3][11]. Economic Performance - Fixed asset investment grew by 4.1% year-on-year in January-February, with infrastructure investment up by 10% and manufacturing investment up by 9% [5]. - The real estate market shows a decline in investment, with a 9.8% year-on-year drop, but new housing prices are stabilizing [5][26]. - The retail sector shows a mixed performance, with essential goods maintaining growth while discretionary items like sports and office supplies perform well [3][12]. Sector-Specific Insights - The beauty sector shows significant recovery, with online sales growth of 18% in January-February, highlighting strong performance from domestic brands [3][16][17]. - The dining and hotel industry is experiencing growth, with a 4.3% year-on-year increase in restaurant sales, although some brands face challenges [3][22][23]. - The agricultural sector, particularly in pork and poultry, is expected to benefit from policy-driven consumption recovery, with leading companies like Muyuan and Wens Foodstuffs showing improved market share [3][24][25]. Recommendations - The report suggests focusing on high-dividend state-owned banks and companies with stable regional economic prospects for investment [3][21]. - In the construction materials sector, companies like China National Building Material and Anhui Conch Cement are recommended due to potential price increases [3][27][28]. - For the home improvement sector, companies such as Three Trees and North New Materials are highlighted for their expected demand recovery [3][29].

Core Viewpoint - The economic performance in January-February 2025 shows stable growth despite a slight decline in production growth rates compared to December 2024, influenced by high base effects from the previous year and the timing of the Spring Festival. Investment is improving at a faster rate than consumption, but uncertainties remain in the real estate and export sectors, necessitating continued policy support [1][2][3]. Economic Performance - January-February industrial added value and service production index grew by 5.9% and 5.6% year-on-year, respectively, down 0.3 and 0.9 percentage points from December 2024 [1][2]. - Fixed asset investment and retail sales grew by 4.1% and 4.0% year-on-year, respectively, with increases of 1.9 and 0.3 percentage points compared to December 2024 [1][3]. - The demand structure indicates that investment is improving more significantly than consumption, with high growth in categories supported by the old-for-new policy, such as home appliances and furniture [1][3]. Real Estate Sector - The real estate sector shows signs of recovery in land acquisition in key cities, with land transaction area and value improving from December 2024's declines to -2.6% and 39.2% year-on-year, respectively [4]. - However, new construction starts have seen a significant decline of 29.6% year-on-year, indicating ongoing weakness in the sector [4][29]. - The sales of new homes have turned negative, with a 5.1% year-on-year decline in sales area, while second-hand home sales remain resilient, growing by 23% [28][29]. Investment Trends - Broad infrastructure investment grew by 9.9% year-on-year, with public utilities and transportation showing strong growth rates of 25.4% and 2.7%, respectively [5][40]. - Manufacturing investment remains robust, driven by prior export improvements and equipment upgrades, with significant increases in automotive and food manufacturing investments [6]. Consumer Market - The retail sales growth rate for January-February was 4.0%, with notable improvements in essential goods and certain discretionary categories, driven by consumption policies [35][36]. - The catering sector saw a 4.3% year-on-year increase, reflecting the impact of the Spring Festival [3][33]. - The introduction of the "Consumption Promotion Action Plan" aims to stimulate demand across various sectors, including maternal and child products [37][45]. Financial Sector - The financial data for February indicates a slight decline in new loans and a weak recovery in credit demand, highlighting the need for further monetary policy support [23][24]. - Government debt issuance has accelerated, contributing to a year-on-year increase in social financing [24][25]. Agricultural Sector - The agricultural sector is experiencing a gradual recovery, with leading companies expanding their market share through improved cost control and operational efficiency [49]. - The overall consumption of agricultural products remains stable, with expectations for a gradual increase in birth rates potentially benefiting the maternal and infant product market [45][46].

中金研究 2025年3月5日，李强总理向十四届全国人大三次会议作政府工作报告，全面部署2025年经济社会发展总体要求和政策取向，设定今年发展的主要预期 目标，安排今年部分重点工作[1]。2025年政府工作报告对经济和金融市场具体可能如何影响？请听中金公司总量以及行业为您联合解读。 宏观 积极回应多方面关切 2025 年 3 月 5 日，国务院总理李强代表国务院，向十四届全国人大三次会议作政府工作报告（以下简称《报告》），延续了 2024 年中央经济工作会议的基 调。《报告》将 GDP 目标被设定为 5% 左右，既考虑了短周期的稳增长需要，也 " 与中长期发展目标相衔接 " 。 CPI 通胀目标被设定为 2% 左右，在通胀偏弱 的情况下，这是一个更为务实的目标，但《报告》也指出 " 实现这些目标很不容易，必须付出艰苦努力 " 。 除了稳增长之外，《报告》也指出要大力发展 以大 AI 为代表的新质生产力，并积极防范金融领域风险， " 稳住楼市股市 " 。总体而言，《报告》对短期与长期、金融与实体等方面的问题都予以积极回 应，报告还指出 " 充实完善政策工具箱，根据形势变化动态调整政策 " ，后续我们将紧密关注各项 ...

Core Insights - The report emphasizes a "spring rally" driven by policy expectations and domestic technological transformations, particularly in AI and new industries, which are expected to boost Chinese assets [3][7] - The macroeconomic environment remains favorable for market performance, with improvements in domestic financial data and a stable outlook for the real estate and stock markets [8][9] - The report highlights the potential for continued upward movement in China's AI core assets, suggesting that there is still room for growth despite some market congestion [10] Industry and Company Summaries Renewable Energy - The global energy storage market is projected to exceed 100 GWh in installed capacity in the first three quarters of 2024, representing a 57% year-on-year increase, driven by rising demand for renewable energy and grid support services [12] Machinery - The company maintains a strong position in the engineering machinery sector, with emerging segments and overseas business showing robust growth [13] Construction - New industries are supporting rapid growth in infrastructure contracts, with overseas business expanding steadily [14][15] Electronics - The company is benefiting from structural demand for PCBs driven by high-performance computing and AI, with plans to invest approximately 4.3 billion RMB in expanding production capacity for high-end PCBs [17] Computing - The company is positioned to capitalize on the increasing demand for domestic AI computing power, with significant developments in its DCU products [19] Pharmaceuticals - The company is expected to see a significant turnaround in net profit growth, driven by new drug launches and improved performance from its subsidiary Echosens [20] Automotive - The company has established itself as a leading global supplier of automotive exterior parts, with a diverse product line and a strong global presence [22] Food and Beverage - The company is experiencing strong revenue recovery, driven by positive market feedback for its products and proactive inventory management ahead of the Spring Festival [23] Non-Bank Financials - The company is seeing robust trading activity in the spot market, with record high transaction volumes and stable investment income [24] Banking - The company is benefiting from balanced growth in corporate and retail banking, with strong loan demand in the Chengdu-Chongqing economic circle [28]