中国多资产_供给侧改革 2.0 推进- 中国应对价格战之役China Multi-Asset_ Supply-Side Reform 2.0 Unfolding—China‘s War on Price Wars

Summary of Key Points from the Conference Call Industry Overview - The focus is on China's Supply-Side Reform 2.0 (SSR2.0), particularly in the manufacturing sector including steel, solar, and cement industries [1][10][18] - The context includes ongoing PPI deflation and the need to address overcapacity and intense competition in various sectors [2][25][27] Core Insights and Arguments - Resilience in Manufacturing: Despite weaknesses in the property market, manufacturing Fixed Asset Investment (FAI) remains strong, indicating potential for recovery [1] - PPI Challenges: The Producer Price Index (PPI) is struggling in negative territory, with prolonged deflation impacting profitability across industries [1][38] - SSR2.0 Expectations: Authorities are expected to implement SSR2.0 to combat overcapacity and price wars, with less aggressive capacity cuts compared to SSR1.0 [2][3][15] - Sector-Specific Measures: The reforms will likely include capacity control, production cuts, and regulatory tightening, particularly in sectors like coal, aluminum, and steel [4][63][64] Key Differences Between SSR2.0 and SSR1.0 - Demand Stimulus: SSR1.0 had strong stimulus measures, while SSR2.0 is expected to have a milder approach [3][15] - Capacity Concentration: SSR1.0 focused on upstream sectors dominated by state-owned enterprises (SOEs), whereas SSR2.0 will address mid- and downstream sectors [3][15] - Implementation Challenges: Policymakers may face difficulties in enforcing reforms due to the complexity of the current industrial landscape [3][65] Potential Outcomes and Stock Picks - Base Case Scenario: Mild demand stimulus with modest improvements in prices and margins for steel, cement, and solar sectors. Preferred stocks include Baosteel, Tongwei, and Conch Cement [5][18] - Bull Case Scenario: Stronger demand stimulus could benefit additional sectors like lithium and batteries, with preferred stocks being Angang, CNBM, CATL, and Tongwei [5][18] - Bear Case Scenario: Less effective supply control could lead to underwhelming demand, favoring existing winners from previous cycles like Hongqiao and Chalco [5][18] Important but Overlooked Aspects - Historical Context: Previous successful reforms in coal and aluminum contrast with the underperformance of the steel sector, highlighting the need for targeted interventions [12][15] - Trade Tensions: Rising trade disputes, particularly in the steel and chemical sectors, could complicate the reform landscape [38][50] - Labor Market Impact: The expected labor market impact from SSR2.0 is anticipated to be minimal compared to previous reforms, with less aggressive capacity cuts [66][70] Conclusion - SSR2.0 is positioned as a critical response to ongoing economic challenges in China, with a focus on stabilizing prices and improving profitability across key sectors. The effectiveness of these reforms will depend on the implementation of supportive demand-side measures and the ability to manage overcapacity effectively [1][27][66]