Investment Rating - The report maintains a "Recommend" rating for the chemical industry, particularly focusing on new materials [1]. Core Insights - The chemical industry is experiencing a recovery in prices due to easing trade tensions between China and the U.S., leading to a replenishment window for trade [9]. - The report highlights a significant year-on-year increase of 49% in the production of power and other batteries in April, despite a slight month-on-month decline of 0.03% [1][13]. - The report emphasizes the importance of new materials, particularly those that are domestically produced and can replace imports, as a key investment opportunity [10]. Industry Overview - The chemical industry has a total market capitalization of approximately 426.56 billion yuan, with 486 listed companies [1]. - The Huachuang Chemical Industry Index stands at 79.16, reflecting a week-on-week increase of 0.95% but a year-on-year decrease of 21.44% [20][22]. - The report notes that the industry price percentile is at 21.88% over the past decade, with a slight increase of 0.37% week-on-week [9][20]. New Materials Sector - The new materials sector has shown a week-on-week increase of 0.26%, underperforming compared to the basic chemical sector, which increased by 1.21% [11][29]. - The report identifies specific companies in the new materials sector that are recommended for investment, including Ruifeng New Materials, Tongyi Zhong, and Lianlong [9]. - The report also mentions the impact of regulatory changes on the safety standards for power batteries, which will be enforced starting July 1, 2026, pushing companies to enhance their battery management systems [13][14]. Price Movements - The report indicates that nitrogen prices increased by 2.97%, while electronic-grade sulfuric acid saw a significant drop of 11.90% [11][26]. - The report provides a detailed overview of price changes in various materials, highlighting both increases and decreases across different sectors [27]. Market Performance - The report notes that the new materials sector is expected to benefit from the ongoing trends in domestic production and import substitution, particularly in high-demand areas such as robotics and renewable energy materials [10][15]. - The report also highlights the performance of specific stocks within the new materials sector, noting both the top gainers and losers for the week [29].

Economic Overview - The economic environment in China is entering a down season, with export pressures expected to increase due to significant tariff hikes from the US, leading to a scenario of "external demand pressure and weak internal demand" [12][19] - In April 2025, China's manufacturing PMI fell below 50 to 49, indicating contraction, while the new export orders PMI dropped to 44.7, reflecting the impact of tariffs on export orders [11][17] Liquidity Conditions - The Federal Reserve is expected to maintain a wait-and-see approach, while domestic liquidity is likely to remain moderately loose, with a significant increase in social financing and new loans in March 2025 [35][47] - The central bank's operations indicate a trend towards easing, with a net injection of liquidity in April and a decrease in funding rates across various maturities [48][49] Policy Support - The April Politburo meeting emphasized stabilizing employment, enterprises, and market expectations, with targeted measures to address the impacts of external shocks, particularly from US tariffs [56][57] - Fiscal policies are set to accelerate the issuance of special bonds, with a focus on optimizing investment directions, while monetary policies will adapt to economic conditions, potentially including rate cuts [58][60] Market and Industry Allocation - The report suggests that technology and growth sectors are likely to outperform in May, with a focus on computer, media, and military industries, driven by improved earnings in small-cap stocks and favorable policy directions [64] - The TMT sector, particularly in computing and semiconductors, is expected to show significant performance improvements, with potential catalysts such as new product releases in the technology space [64]

Market Review - The global stock indices experienced a rebound after the initial drop due to the announcement of "reciprocal tariffs" by the US in early April, with major indices in Brazil, India, Australia, Japan, South Korea, and the US Nasdaq recovering to pre-tariff levels. The A-share market showed strong performance in value and stability styles, while growth styles lagged behind, with significant net subscriptions in ETFs during April [1][2] - In April, the power equipment index fell by 8%, while the communication, computer, electronics, and machinery equipment sectors saw declines exceeding 4%. In the commodities market, gold stood out with strong performance, while crude oil, copper, aluminum, and black commodities experienced declines. The US dollar index significantly decreased, and the offshore RMB appreciated against the US dollar, recovering the 7.2 level since mid-April [1][2] Market Outlook - The appreciation of the RMB is expected to boost confidence in Chinese assets, with significant gains in Hong Kong and Chinese concept stocks during the holiday period, leading to an anticipated strong opening for A-shares post-holiday. From May 1 to 2, the Nasdaq China Golden Dragon Index and the Hang Seng Tech Index rose by 3.7% and 3.1%, respectively, leading global major indices [3][4] - The Politburo meeting in April conveyed a stabilizing signal, indicating a domestic policy direction focused on "actively responding and daring to fight" externally, while internally emphasizing "managing our own affairs." This suggests a clear policy approach to expand domestic demand and stabilize expectations, which may manifest in the establishment of long-term market stabilization mechanisms and regular "support" signals in the capital market [3][4] - The domestic and international AI technology industry trends continue to evolve, with a focus on catalysts in the AI sector in May. Following the tariff impacts, the A-share AI+ industry chain has seen an overall correction, but investment opportunities in the AI+ sector are expected to become active again. High capital expenditure in the AI field is anticipated to continue, with significant developments from companies like Microsoft and Meta, as well as new model releases from Alibaba and Xiaomi [4]

Group 1 - ByteDance has accumulated approximately 100,000 GPU modules, valued at around 100 billion yuan, primarily for its own large model and cloud services, although these only account for less than 10% of the resource usage [3][4] - ByteDance's computing power resources have reached a scale that ranks among the world's top tiers, with about 1 million cards currently in use [4][5] - The demand for computing power is expected to surge due to the recent export controls on NVIDIA's H20 chips, which will further increase domestic demand [5] Group 2 - The Ministry of Commerce is supporting local development of automotive modifications and related markets, aiming to enhance consumption's role in economic growth [6][8] - Specific initiatives include promoting automotive circulation reform, stabilizing and expanding automotive consumption, and improving the efficiency of second-hand car transactions [7][8] Group 3 - Apple is developing two significant new models to celebrate the 20th anniversary of the iPhone, including its first foldable phone and a new Pro model, with production likely to remain in China due to complexity [9] Group 4 - Porsche's CEO indicated that the company may stop selling electric vehicles in China within the next two to three years due to declining sales, with a reported 28% drop in sales in 2024 [22] Group 5 - Vivo has adjusted the default color temperature of its X series screens to 6800K, aligning closer to professional standards, which is expected to reduce visual fatigue [24][25] Group 6 - Geoffrey Hinton, a Nobel laureate, expressed concerns about AI potentially surpassing human control, predicting that AI agents could pose significant risks to decision-making power [32][33]