路演问答与反馈_全球股票策略版-Questions, Pushback & Feedback From The Road_ Global Equity Strategy Edition

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the global equity strategy, with a focus on the AI sector and its implications for investment strategies across various markets, including emerging markets (EM) and developed markets. Core Insights and Arguments 1. AI Bubble Concerns: - The predominant question from clients was whether the market is in an AI bubble. The response indicates that the significant capital expenditure (capex) in AI, amounting to USD 700 billion in flagship projects, suggests a robust investment environment rather than a bubble. Current capex as a share of GDP is 3.8%, higher than during the dot-com bubble, but capex as a share of operating cash flows is around 40%, lower than the 70% seen in the early 2000s [4][5][19]. 2. Generative AI Market Potential: - The total addressable market (TAM) for generative AI is projected to grow from USD 40 billion in 2022 to USD 1.3 trillion by 2032, reflecting a 43% CAGR. The TAM for large language models (LLM) alone could reach USD 500 billion by 2030 [5][11]. 3. Impact of the One Big Beautiful Bill Act (OBBBA): - The OBBBA is expected to reduce the cost of capital for manufacturing by 15%, incentivizing tech companies to increase investments. Key provisions include 100% capex depreciation and enhanced manufacturing investment credits, which significantly improve the economics of AI and semiconductor investments [6][7][19]. 4. Risks to Bullish View: - Two main risks were highlighted: - AI Momentum Bursts: If AI adoption fails to meet expectations, it could lead to negative earnings revisions, particularly affecting the "Magnificent 7" tech companies that constitute 33% of the S&P 500 [20][21]. - Overheating: A surge in AI and data center projects could lead to inflationary pressures, particularly in construction, which could impact market expectations for interest rate cuts [22][23]. 5. Emerging Markets (EM) Outlook: - EM equities have outperformed the US by 8% year-to-date, with expectations for continued momentum due to factors like Fed easing and reduced tariff uncertainties. Key preferences include Chinese equities, Mexico, and undervalued markets like Indonesia and Türkiye [37][38]. 6. Valuation Concerns: - There is skepticism regarding the potential for further valuation increases, especially in the US, where the market trades at 23x forward PE. However, the ROE-COE framework suggests that the US market is fairly valued, with potential for COE to decrease as the Fed eases [69][70]. 7. Underweight Position on Japan: - Despite bullish sentiment on Japan, the company maintains an underweight position due to concerns about the impact of fiscal policy, trade vulnerabilities, and relatively high valuations compared to other markets [85][86]. 8. Investor Sentiment on AI: - Investors are seeking hedges against potential AI market corrections, with a notable shift towards Asian tech stocks, particularly TSMC and Tencent, which are perceived as having more attractive valuations compared to US counterparts [98][99][100]. 9. European Market Dynamics: - European equities have lost momentum, with concerns about the effectiveness of German fiscal stimulus. However, there is optimism regarding European banks and defense stocks, which are expected to benefit from structural changes in defense spending [117][120][121]. Other Important Insights - AI Adoption and Productivity: Evidence suggests that AI adoption is accelerating, with 49% of US companies now having paid AI model subscriptions. This is expected to lead to significant productivity gains, with potential margin expansion for S&P 500 companies by 2030 [49][50][54]. - Market Concentration: The concentration of the largest companies in the US equity market is at elevated levels, which poses risks if any of these companies underperform [26][27]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the global equity market, particularly in relation to AI and emerging markets.