J P M O R G A N Asia Pacific Economic Research 22 December 2025 Global Data Watch: Asia China's post-tariff export diversification is broader than presumed No place to hide: China's post-tariff export diversification is broader than presumed A recurring theme characterizing 2025 has been that Chinese domestic demand disappointments have been offset by external sector resilience. Even as US tariffs on China at ~32% are among the highest in the world, China's goods exports have grown by 5% in 2025, in line wi ...

China's energy storage firms, battered by a three-year price war, have been jolted by lithium battery maker Deegares, which has announced plans to raise prices by 15 per cent, a move that is sparking debate over whether the sector could be the first to break free from the "involution" cycle. Rising lithium costs were the immediate trigger, with at least three other battery makers reported in recent weeks to be planning similar increases. Prices of the metal, crucial to rechargeable batteries, have reboun ...

Company Overview - SES AI Corporation is focused on modernizing lithium batteries and has seen its stock price increase over 400% in the past year, currently trading under $2 per share with a market cap of under $700 million [1][3] - The company was founded in 2012 and went public in 2022 through a special purpose acquisition company [3] Industry Context - The lithium battery industry is poised for modernization and AI innovation, with applications in various sectors including automobiles and drones [2] - The total addressable market for lithium battery innovations could exceed $500 billion by 2032, indicating significant growth potential [14] Financial Performance - SES reported a revenue of $7.1 million in Q3 2025, with an upward revision of revenue guidance from $20 million to $25 million [10][11] - The company is experiencing a lower net loss and has engaged in share repurchases, which are positive indicators for long-term success [6] Strategic Moves - SES has acquired UZ Energy and formed a partnership with Hisun New Energy Materials, marking a significant turning point for the company [8] - The company has released its AI software, Molecular Universe, which accelerates battery material discovery and enhances its service platform [2] Growth Projections - The energy storage industry, a key area for SES, is projected to have a compound annual growth rate (CAGR) of 27% over the next five years [9] - If SES can maintain a CAGR of 20% for the next 20 years, a $25,000 investment today could grow to nearly $1 million by 2045 [9] Market Sentiment - The stock's dramatic rise is partly attributed to broader investor sentiment in the AI and electric vehicle sectors, although some analysts caution that the increase may be based on hype rather than financial fundamentals [12][13]

Summary of J.P. Morgan's 2026 China Economic Outlook Industry Overview - The report focuses on the **Chinese economy** and its outlook for 2026, highlighting challenges and opportunities in various sectors. Key Economic Forecasts - **Real GDP Growth**: Expected to slow from **4.9% in 2025** to **4.4% in 2026** [2][5][22] - **Nominal GDP Growth**: Forecasted at **4.0% in 2025** and **4.2% in 2026** [2][5] - **CPI Inflation**: Projected to rise to **0.6% in 2026** from **0.0% in 2025** [2][5] - **PPI Deflation**: Expected to persist, with a forecast of **-1.3% in 2026** [2][5] - **Policy Rate**: Anticipated to remain stable around **1.4%** [2] Core Insights - **Economic Resilience**: Despite trade war fears, China's economy showed resilience in 2025, with exports and fiscal expansion supporting growth [5][6][9] - **Deflationary Pressures**: Production continues to outpace demand, leading to intensified deflation and a decline in nominal GDP growth to **4.3%** [5][7] - **Investment Trends**: Investment growth is expected to recover, particularly in high-tech manufacturing, but real estate investment is projected to contract by another **10%** [5][40] - **Consumption Growth**: Modest consumption growth is anticipated, with limited support from subsidies and transfers [5][26][33] Policy and Structural Changes - **15th Five-Year Plan**: Emphasizes advanced manufacturing and technology indigenization, with a lukewarm approach to services [13][14] - **Fiscal Policy**: A fiscal impulse of **0.4-0.5% of GDP** is expected, with total bond issuance reaching **14.5 trillion yuan** in 2026 [5][66] - **Monetary Policy**: The PBOC is expected to implement measured monetary easing, including rate cuts and RRR adjustments [70][78] Trade and Export Dynamics - **Export Growth**: Expected to moderate to **3.4% in 2026**, with net exports contributing less to GDP growth [49][48] - **US-China Trade Relations**: The fragile truce in trade relations may impact future export dynamics, with tariffs likely remaining elevated [18][20][51] Risks and Challenges - **Downside Risks**: Include potential bankruptcies due to anti-involution measures, further deterioration in the housing market, and renewed US-China tensions [89] - **Upside Potential**: Larger-than-expected fiscal expansion and stronger policy shifts towards consumption could enhance growth prospects [89] Additional Considerations - **Household Consumption**: Remains low due to high savings rates driven by job insecurity and a weak social safety net [30][33] - **Investment Recovery**: Uneven, with public investment expected to outpace private investment, particularly in high-tech sectors [39][40] This summary encapsulates the critical insights and forecasts from J.P. Morgan's 2026 China Economic Outlook, providing a comprehensive overview of the anticipated economic landscape.

Core Viewpoint - The A-share market is experiencing a strong upward trend, with major indices closing in the green and the Shanghai Composite Index reaching a 10-year high, indicating a positive outlook for 2026 [1][2]. Market Performance - The Shanghai Composite Index rose by 0.73%, the Shenzhen Component increased by 1.78%, and the ChiNext Index gained 2.55% [1]. - Over 3,900 stocks rose, with 106 stocks hitting the daily limit up [1]. Sector Highlights Lithium Battery Sector - The lithium battery concept saw a significant surge, with stocks like Huasheng Lithium and Ningde Times rising over 7% [1]. - The demand for lithium batteries, driven by energy storage needs, has led to a rise in prices for key materials like electrolyte additives [3]. Photovoltaic Sector - The photovoltaic sector rebounded strongly, with companies like Hesheng Silicon and Dongyue Silicon experiencing substantial gains [5]. - The National Energy Administration's guidance on promoting renewable energy integration has positively impacted the sector [5][6]. Precious Metals - Precious metals, particularly gold, saw a price increase, with COMEX gold futures rising by 2.07% to $4,201.4 per ounce [8]. - The market for precious metals is expected to benefit from ongoing ETF inflows and central bank purchases [8]. Institutional Perspectives - Shenwan Hongyuan believes that the bull market has further depth, with the spring of 2026 potentially marking a phase high but not the peak of the current bull market [10][11]. - Zhongyuan Securities suggests that the Shanghai Composite Index is likely to consolidate around the 4,000-point mark, with a balanced market style expected to continue [12]. - Everbright Securities notes that the market is currently in a policy window period, with strong expectations for December policies, which may support a continued upward trend [13].

Market Overview - The Powersports Batteries Market was valued at USD 3.6 Billion in 2024 and is projected to reach USD 5.54 Billion by 2032, growing at a CAGR of 5.54% from 2025 to 2032 [1][7] - The U.S. market is expected to grow at a CAGR of 2.99% during the same period, reaching USD 1.37 Billion [1] Growth Drivers - The increasing popularity of electric bikes, ATVs, and recreational vehicles, along with the demand for long-lasting, high-performance batteries, is driving market growth [1] - Innovations in rapid-charging and cost-effective battery technologies are enhancing energy conversion and lifespan, further propelling market expansion [2] Technological Advancements - New developments in alternative battery chemistries, such as sodium-ion and advanced lithium-based systems, are improving energy density and reducing production costs [2] - These advancements enable longer ride durations and quicker recharging for electric motorcycles, ATVs, and recreational vehicles, increasing market adoption [2] Market Segmentation - Lead-acid batteries held a dominant share of 37% in 2024, with sealed lead-acid batteries projected to grow at a CAGR of 7.91% [8] - Lithium-ion batteries dominated the market with a 49% share in 2024, while lithium iron phosphate (LFP) batteries are expected to grow at a CAGR of 10.54% [9] - Starter batteries accounted for 35% of the market in 2024, with deep cycle batteries projected to grow at a CAGR of 6.67% [10] Application Insights - Automotive batteries (starter and deep cycle) dominated the market with a 40% share in 2024, while solar and renewable energy applications are expected to grow at a CAGR of 10.54% [13] Regional Insights - North America leads the global Powersports Batteries Market with a 44% share in 2024, while the Asia Pacific region is the fastest-growing at a CAGR of 7.19% [14] Key Market Players - Leading companies in the Powersports Batteries Market include BS Battery, CLARIOS LLC, Discover Battery, East Penn Manufacturing Co. Inc., EnerSys, Exide Industries Ltd., and others [5][12]

Core Insights - Lithium mining stocks are gaining attention, particularly American Battery Technology Co (ABAT), which saw a 33% increase to $8.98 after completing NEPA baseline studies for its Tonopah Flats Lithium Project [1] - ABAT reached a two-year high of $10.18 and is on track for its sixth consecutive daily gain, with a year-to-date increase of 267.3% [2] - Lithium Americas Corp (LAC) shares rose 11.4% to $8.35, benefiting from U.S.-China trade discussions, with a significant 206.9% increase over the past six months [3] Company Performance - ABAT's stock performance has been notable, with a significant rally from penny stock levels and high trading volume in options, particularly in the October 10 call [2] - LAC's stock has shown resilience, breaking through the $5 mark in late September and trading above all moving averages, indicating strong momentum [3] - Despite positive trends, LAC faces a cautious outlook from analysts, with 10 out of 13 brokerage firms maintaining a "hold" or worse rating, and 13.2% of its float sold short [4]

Core Viewpoint - Standard Lithium's share price increased by 15.3% in response to China's new export controls on lithium battery materials, which may benefit the company in the ongoing trade conflict with the U.S. [1] Group 1: China's Export Controls - China's Ministry of Commerce and General Administration of Customs announced export controls on lithium batteries and critical materials in the lithium-ion supply chain, requiring licenses for exports starting November 8 [2] - These controls provide China with significant leverage in trade negotiations with the U.S. and emphasize the need for the U.S. to secure its own supply chain for battery production [3] Group 2: Standard Lithium's Position - Standard Lithium, with its lithium-brine properties in the Smackover Formation, is viewed as a potential beneficiary of these developments, especially with JPMorgan Chase's recent commitment to invest $1.5 trillion in its "Security and Resilience Initiative" [4] - Market excitement is building around Standard Lithium, although it is noted that the company may take time to generate revenue and there are uncertainties regarding future investments and lithium prices [5] Group 3: Investment Considerations - Analysts from The Motley Fool Stock Advisor have identified other stocks as better investment opportunities compared to Standard Lithium, despite the current market interest in the company [6] - Historical performance of stocks recommended by The Motley Fool highlights the potential for significant returns, but Standard Lithium was not included in their latest top picks [7][8]

Core Viewpoint - Shares of American Battery Technology Company (NASDAQ: ABAT) increased by 37% to $9.27 following the completion of all required baseline studies for its Tonopah Flats Lithium Project [1] Company Summary - American Battery Technology Company has successfully completed all necessary baseline studies for its Tonopah Flats Lithium Project, which has positively impacted its stock price [1]

Group 1 - A-share market shows a strong performance in the technology growth sector, with the Sci-Tech 50 Index rising 2% to reach a nearly four-year high, driven mainly by the semiconductor and new energy sectors [1][2] - The semiconductor industry chain and new energy track are identified as the two main lines of growth, with storage chip stocks experiencing a surge due to ongoing price increase news [1][2] - The A-share market's trading volume reached 1.37 trillion yuan, indicating a strong willingness for active trading before the holiday, with technology growth being a consensus among investors [1][2] Group 2 - The A-share market shows a divergence between large and small-cap indices, with the technology growth style prevailing, as evidenced by the Shanghai Composite Index rising 0.4% to 3878.13 points [2] - Over 2900 stocks in the market rose, with a concentration of limit-up stocks in storage chips and non-ferrous metals, indicating a shift of main funds towards technology growth sectors [2] - The Hong Kong market displays a mixed performance, with the Hang Seng Technology Index rising 0.55%, supported by the semiconductor and biopharmaceutical sectors, while the energy sector declines due to international oil price pressures [2][3] Group 3 - The semiconductor sector in the Hong Kong market has shown significant growth, with a year-to-date increase, becoming a key driver of technology growth [3] - Gold prices have surpassed $3860 per ounce, with a year-to-date increase of over 47%, leading to a strong performance in gold stocks amid rising geopolitical risks and expectations of liquidity easing [3] - The traditional financial sector in the A-share market has seen collective adjustments, with banks, insurance, and brokerage stocks experiencing notable declines due to profit-taking pressures ahead of favorable policies [3] Group 4 - The current market is in a critical phase characterized by a "policy window + industrial catalysis," with technology growth being clearly defined as the main line of investment [3] - Recommendations for investment focus on three main areas: the entire semiconductor industry chain, upstream resources in new energy, and safe-haven assets like gold, driven by geopolitical risks and global liquidity expectations [3][4] - Long-term views emphasize that "Artificial Intelligence +" and high-end manufacturing remain key areas of policy support, with sectors like semiconductors, non-ferrous metals, and defense industries benefiting from policy dividends and industrial trends [4]