USA | Chemicals Equity Research March 19, 2026 The Bullwhip: Two Scenarios For The Iran War Oil Shock Two of the most common investor scenarios--the short war with quick normalization and the extended conflict with a structural surge in energy costs-- imply very different bullwhip effects both in the near-term and into 2027-2028. Q1 earnings calls should give a sense for the degree to which companies are favoring one scenario, with implications for both volume and FCF conversion dynamics. An Extended Shock ...

Core Viewpoint - JOYY Inc. is set to release its fourth quarter and full year 2025 financial results on March 10, 2026, after the U.S. market closes, followed by an earnings conference call [1] Group 1: Financial Results Announcement - The financial results will be announced after the U.S. market closes on March 10, 2026 [1] - An earnings conference call is scheduled for 9:00 PM U.S. Eastern Time on the same day [1] - Participants can register online in advance to receive dial-in numbers and a unique PIN [1][2] Group 2: Company Overview - JOYY Inc. is a leading global technology company focused on enriching lives through technology [3] - The company has a diversified product portfolio that includes live streaming, short-form videos, instant messaging, and emerging initiatives like advertising and smart commerce SaaS [3] - JOYY is headquartered in Singapore and operates globally, empowering creators, merchants, and enterprises [3] - The company's American Depositary Shares (ADSs) have been listed on NASDAQ since November 2012 [3]

24 February 2026 | 9:55PM HKT Equity Research CHINA INDUSTRIAL TECH Cost inflation pressures 1Q26 margins; export-aligned names poised for better recovery ahead We revise our sector FY25-FY28E EPS by -27% to +4% and TP forecasts by -8% to +4% (-3% on average). Our changes primarily reflect the impact of raw material cost trends, partially offset by delayed pricing pass-through to customers and those with a higher sales mix from developed markets (DM). Specifically, we have cut 1-2Q26E EPS by up to -18% for ...

Core Insights - The report by Kearney highlights a significant reduction in the time required for Chinese brands to establish recognition overseas, from a decade to just 3-5 years, driven by cross-border e-commerce, social media, and advanced supply chain systems [1][4]. Brand Evolution - Chinese brands are no longer just exporting products but are also effectively conveying cultural expressions and lifestyles, redefining the global consumer landscape [3][4]. - The success of brands like Pop Mart and Florasis illustrates a shift in the paradigm of Chinese consumer goods going global, reflecting a transformation in consumer engagement [3][4]. Strategic Shifts - There has been a notable upgrade in strategic thinking among Chinese companies, with global expansion now viewed as a necessity rather than an option, leading to organizational changes such as the establishment of independent overseas divisions [5][12]. - The traditional linear business model is evolving into an agile approach that emphasizes iterative testing and rapid market feedback, allowing for quicker strategic adjustments [6][12]. Brand Positioning - The fundamental change in brand positioning sees Chinese brands moving away from competing solely on value-for-money to establishing premium pricing and cultural narratives that resonate with global consumers [7][8]. - Successful cultural exports, such as the games Black Myth: Wukong and Ne Zha, demonstrate the potential for Chinese cultural elements to gain international recognition through innovative storytelling [7][10]. Categories of Brands - Kearney categorizes Chinese consumer brands into three types: 1. Home appliances and consumer electronics, facing challenges in maintaining growth and profit margins [8]. 2. Fashion apparel and cultural products, which are experiencing high growth but must build user loyalty and cultural connections [8][9]. 3. Toys, beauty, and personal care products, showing explosive growth potential, exemplified by brands like Florasis [9]. Lessons from Other Markets - Insights from Japan and South Korea highlight the importance of maintaining quality and responsiveness in global markets, with Japanese brands serving as a cautionary tale against centralized decision-making and over-reliance on specific markets [10][11]. Future Trends - The integration of artificial intelligence is expected to enhance product iteration and supply chain efficiency, while the cultural content industry will provide brands with greater pricing power [12]. - Companies face challenges such as management inertia, talent pipeline issues, and compliance costs, necessitating localized decision-making and talent cultivation [13]. Confidence in Chinese Brands - There is a strong belief in the potential of Chinese brands, bolstered by supply chain advantages and strengths in product design and localized marketing, although global expansion remains a high-risk endeavor [14].

Summary of the Japan Equity Strategy Conference Call Industry Overview - The focus is on the Japanese equity market amid rising long-term interest rates, particularly the implications for stock selection and investment strategies in Japan [1][6][15]. Core Insights - **Negative Real Interest Rates**: Despite rising long-term interest rates, Japan's real interest rates remain negative, which is supportive of equity valuations [6][15][16]. - **Equity Valuations**: Japanese equities are considered inexpensive in a global context, with a higher yield spread compared to the US and Europe, indicating that rising rates do not necessarily lead to a bearish outlook for Japanese stocks [17][36]. - **Leverage Metrics**: Leverage-related metrics are not expected to be significant drivers of stock selection in the current environment, with a shift towards value factors becoming more effective [6][22][32]. Market Dynamics - **Long-Term Interest Rates**: The Bank of Japan (BoJ) faces challenges with rising yields, particularly in the super-long segment of the Japanese Government Bonds (JGB) market, which has seen a lack of buyers and increased selling pressure [7][8][11]. - **Fiscal Concerns**: There are concerns regarding fiscal dominance as the government considers consumption tax cuts, which could impact market confidence and bond yields [11][14][35]. - **Investment Strategy**: The current environment suggests that investors should not adopt excessive pessimism towards Japanese equities, as the fundamentals remain supportive [15][36]. Key Data Points - **JGB Yields**: As of January 20, 2026, 10-year JGB yields exceeded 2.3%, marking a significant rise [38]. - **Dividend Yields**: For over 20 years, long-term yields have remained below dividend yields, but recent trends show a slight inversion, indicating changing market dynamics [39][41]. - **Value Factor Performance**: A 1% increase in Japanese long-term rates is estimated to raise composite value factor returns by 23.83%, significantly higher than the impact of US long-term rates [33][62]. Additional Considerations - **Market Liquidity**: The lack of buyers in the super-long JGB market has led to a self-reinforcing negative cycle, raising concerns about fiscal stability and market liquidity [8][10]. - **Equity Growth Expectations**: In rising rate environments, companies with higher leverage may outperform due to enhanced growth expectations, countering the typical profit pressure from increased interest expenses [22][25][28]. - **Inflation Dynamics**: Historical data suggests that moderate inflation levels are beneficial for equities, indicating potential for improved returns if Japan transitions from deflation to a stable inflationary environment [57]. Conclusion - The Japanese equity market is positioned to navigate rising long-term interest rates without significant adverse effects, supported by negative real interest rates and attractive equity valuations. Investors are encouraged to focus on value factors and remain optimistic about the potential for growth in the Japanese market [15][36].

Core Insights - Shanghai aims to build a world-class high-end industrial cluster and achieve a per capita GDP that doubles from 2020 levels by 2035, marking a significant step in China's urban development strategy [1][2] Group 1: High-Quality Development Goals - The primary goal for Shanghai during the 14th Five-Year Plan period is to achieve significant results in high-quality development, maintaining economic growth within a reasonable range and improving total factor productivity [1][2] - Shanghai's development strategy emphasizes a shift from scale expansion to high-quality development and structural optimization, impacting both economic sectors and individual income levels [2] Group 2: Five Centers Construction - The construction of the "Five Centers" (economic, financial, trade, shipping, and technological innovation) is a strategic task assigned to Shanghai, with a focus on enhancing its international economic center status [2][4] - Shanghai plans to accelerate the development of three leading industries, including integrated circuits, innovative pharmaceuticals, and artificial intelligence, to strengthen its industrial capabilities [2][4] Group 3: Focus on Advanced Industries - Shanghai's strategy includes a clear focus on high-end industrial clusters, aiming to tackle key technologies and enhance its position in the global urban system [4][6] - The city intends to build a modern industrial system characterized by advanced manufacturing, aiming to create a strong "Shanghai Manufacturing" brand [4][6] Group 4: Emerging and Future Industries - Shanghai is set to establish six emerging pillar industry clusters, focusing on new energy vehicles, advanced materials, and green low-carbon industries, among others [8][10] - The city emphasizes "agile layout" in future industries, which involves strategic positioning in cutting-edge technologies and innovation [8][9] Group 5: Financial Support for Innovation - To support the high-end industrial cluster, Shanghai plans to enhance its international financial center capabilities, including the establishment of a financial asset trading platform and the development of technology finance [10][11] - The city aims to create a comprehensive technology finance service system that supports early-stage investments and long-term capital for high-tech industries [10][11]

Key Takeaways from the Global Strategy Conference Industry Overview - The conference focused on global economic outlooks, equity strategies, and asset allocation trends for 2026, with a significant emphasis on emerging markets and geopolitical risks. Core Insights 1. **Positive Economic Sentiment**: The overall sentiment among participants was very positive, with strong economic activity and robust equity prices. There was a clear preference for diversification, particularly towards Emerging Markets [4][9]. 2. **US GDP Growth Expectations**: Over 80% of surveyed clients expect US GDP growth to be at or above the consensus of 2.1% for 2026, with a notable optimism reflected in the expectation of 2.8% growth from Goldman Sachs [9][12]. 3. **Monetary Easing Anticipation**: A strong consensus exists for monetary easing, with most respondents expecting rate cuts from the Federal Reserve averaging around 70 basis points, or approximately three cuts [9][19]. 4. **Geopolitical Risks**: Geopolitical concerns have surged, with 65% of participants citing it as the biggest risk for 2026, a significant increase from previous years [9][41]. 5. **Equity Market Outlook**: A record 82% of respondents expect positive global equity returns in 2026, with 42% anticipating double-digit gains. This follows three consecutive years of strong performance for the MSCI AC World [9][48]. 6. **Emerging Markets Preference**: There is a growing preference for Asia ex-Japan and other Emerging Markets over the US, with expectations for India and China to be top picks for long-term investment opportunities [9][36]. 7. **Sector Performance Expectations**: Technology remains the top sector, but interest is also growing in Energy, Financials, and Industrials. A diversified approach is favored, with no single sector dominating [9][62]. 8. **S&P 493 vs. Magnificent 7**: Approximately 60% of respondents believe the broader S&P 493 will outperform the concentrated Magnificent 7, indicating a shift away from mega-cap dominance [9][63]. 9. **Commodities Outlook**: Commodities are gaining traction, with 35% of clients expecting them to outperform equities, a significant increase from previous years [9][68]. 10. **Currency Expectations**: Most clients expect the Euro to strengthen against the Dollar, with 37% anticipating the EUR/USD to end the year between 1.15 and 1.20 [9][84]. Additional Important Insights - **Interest Rate Projections**: Clients expect US 10-year yields to remain between 4% and 4.5%, with a slight bullish tilt towards lower yields compared to previous expectations [9][75]. - **Investment in Emerging Markets**: India remains the top pick for long-term investment among Emerging Markets, though its dominance is waning as interest in China rises significantly [9][36]. - **Geopolitical Developments**: The ongoing geopolitical tensions, particularly in regions like Venezuela and Taiwan, are expected to impact global markets significantly [9][32]. This summary encapsulates the key points discussed during the Global Strategy Conference, highlighting the optimistic outlook for economic growth, equity markets, and the increasing focus on geopolitical risks and emerging markets.

Core Viewpoint - The article emphasizes the importance of promoting original innovation and tackling key core technologies, particularly in fields such as integrated circuits, industrial mother machines, high-end instruments, basic software, advanced materials, and biomanufacturing, to create disruptive and asymmetric technologies with first-mover advantages [1][2][6]. Group 1: Innovation and Technology Development - The Shenzhen Municipal Government's proposal for the 15th Five-Year Plan highlights the need for organized innovation, focusing on the world's technological frontiers and major national needs, while implementing various management mechanisms to enhance innovation [2][3]. - There is a strong emphasis on strengthening the role of enterprises in innovation, directing resources towards them, and fostering collaboration among leading enterprises, universities, and research institutions to create a robust innovation ecosystem [3][4]. Group 2: Research and Development Investment - The article discusses the necessity of increasing R&D investment from multiple sources, including government, enterprises, and society, to maintain leading levels in both scale and efficiency of output [4][10]. - It suggests reforms in government funding policies and encourages enterprises to increase their R&D spending through supportive measures like tax deductions [4][10]. Group 3: Educational and Talent Development - The plan calls for a comprehensive approach to integrate education, technology, and talent development, aiming to create a globally influential education and scientific center [7][9]. - It emphasizes the importance of cultivating high-level talent and fostering a collaborative environment between industry and academia to drive innovation [7][9]. Group 4: Innovation Ecosystem - The article advocates for building a first-class innovation ecosystem by enhancing financial services for startups and ensuring a supportive environment for new technologies and products [10]. - It highlights the need for improved intellectual property protection and the establishment of platforms for technology transfer and financing [10].

Core Viewpoint - The Shenzhen Municipal Committee emphasizes the importance of promoting original innovation and tackling key core technologies in its 15th Five-Year Plan for economic and social development [1] Group 1: Innovation and Technology Development - The plan focuses on organized innovation, implementing various management mechanisms such as project manager system, leaderboard system, owner system, and lump-sum system to enhance technological advancements [1] - Key areas for technological breakthroughs include integrated circuits, industrial mother machines, high-end instruments, basic software, advanced materials, and biomanufacturing [1] - The goal is to accelerate the formation of disruptive and asymmetric technologies with first-mover advantages [1] Group 2: Research and Development - There is a strong emphasis on strengthening both fundamental research and applied basic research, optimizing the environment for original and disruptive innovation [1] - The initiative aims to produce more landmark original achievements that can drive industry development [1] Group 3: Addressing Key Challenges - The plan addresses critical issues such as "bottleneck" problems, achieving cost-effective domestic alternatives, promoting technological process innovations, and launching new products that better meet market demands [1] - It aims to systematically advance research and application of new technologies, products, business models, and new industries across various sectors [1] - The objective is to create a batch of internationally competitive landmark products and technologies, thereby continuously generating new industries, models, and driving forces [1]

Investment Rating - The report indicates a positive outlook for the Chinese equity market, particularly aligned with the 15th Five-Year Plan (FYP) [3][40]. Core Insights - The 15th FYP emphasizes high-quality, secure, and balanced growth, with a focus on technology, innovation, and improving people's livelihoods as key priorities for 2026-2030 [1][12]. - Historical analysis shows that aligning investment strategies with the FYP can yield significant alpha, with a potential 13% annualized alpha if portfolios are aligned with policy trends [2][18]. - The report identifies a universe of 35 GICS3 Industries that are expected to benefit from policy support, representing a total market cap of US$13 trillion, which is 66% of the full universe [3][40]. Summary by Sections 1. Historical Performance and Policy Alignment - MSCI China and CSI300 have delivered 8-10% total return CAGR since the 10th FYP, trailing nominal GDP growth of 11% [2][18]. - The report highlights that specific sectors mentioned in the 14th FYP significantly outperformed the benchmark, with average returns of 41% compared to -3% for the CSI300 [24][25]. 2. 15th FYP Portfolio Construction - The report screens for 50 mid-cap stocks across 21 sub-sectors, which have returned 68% in the past year, outperforming MSCI China by 33 percentage points [4][54]. - These stocks are expected to deliver a 30% EPS CAGR over the next two years, compared to 15% for MSCI China, indicating strong growth potential [4][54]. 3. Key Themes and Investment Opportunities - The report identifies several investment themes, including the return of private-owned enterprises (POEs), Going Global, AI, Anti-Involution, and Shareholder Returns, which are expected to outperform in a slower market [3][40]. - Emerging technologies such as 6G, bio-manufacturing, and hydrogen/nuclear fusion are highlighted as new areas of focus in the 15th FYP [12][15]. 4. Sectoral Analysis - The selected industries predominantly reside in Technology, Consumer, and Materials sectors, with a strong emphasis on tech-related industries expected to receive policy support [40][41]. - The report notes that the 15th FYP universe is expected to grow faster than the broader market, with higher profitability and growth capex intensity [40][39].