Summary of Key Points from the Conference Call Industry and Company Overview - The document primarily discusses the implications of macroeconomic factors on equity markets, Treasury yields, and European defense spending strategies, with a focus on the U.S. financial system and European geopolitical dynamics. Core Insights and Arguments Treasury Yields and Equity Performance - The correlation between equity prices and nominal Treasury yields has recently trended negative, indicating a regime shift in market behavior. The critical level for U.S. Treasury 10-year yields (UST 10Y) remains at 5%, but recent trends suggest negative equity reactivity at lower yield levels (~3% UST 10Y) due to a transition from a low yield/low inflation environment to a moderate yield/high inflation context post-COVID [5][16][18]. - Core CPI moderation over the last two years suggests that 5% UST 10Y remains a headwind for equities, but if core CPI were to reflate, negative yield/equity correlation could occur at sub-5% UST 10Y yields [5][16][18]. - The current negative yield/equity correlation presents an opportunity for hedging against recession scenarios, with specific strategies recommended for equity and bond positioning [5][16]. Supplementary Leverage Ratio (SLR) Relief - Anticipated SLR reforms under the Trump administration could reduce the minimum requirement for U.S. Global Systemically Important Banks (GSIBs), potentially creating about $6 trillion in incremental leverage capacity. This could support bank demand for Treasuries and widen swap spreads [5][19][21]. - SLR relief may also enhance dealer repo intermediation capacity but could reduce the value of central clearing, shifting focus towards margin cost reduction [5][20]. European Defense Spending Strategy - Europe's defense spending is currently low and inefficiently allocated, with national competencies leading to fragmented decision-making. A proposed increase in euro area defense spending from approximately 2% to 3.5% of GDP by 2035 could boost GDP by 1.6 percentage points compared to a no-increase scenario [6][24]. - The anticipated increase in defense spending would require careful consideration of public finances and government securities issuance, with expectations for flexible EU fiscal rules and potential redirection of unused EU funds towards defense [6][24]. - A well-designed pan-European solution for defense spending that promotes R&D and resource reallocation is deemed more effective than merely reforming fiscal frameworks for national increases [6][24]. Additional Important Insights - The document highlights the potential for a significant shift in European defense policy due to geopolitical pressures, including Russian aggression and competition from China, necessitating a reevaluation of security and defense strategies [6][24]. - The upcoming German elections are viewed as a critical moment for Europe, with potential implications for fiscal policy and defense spending, which could affect market sentiment and investment flows [6][34][35]. This summary encapsulates the key points discussed in the conference call, focusing on the implications of macroeconomic trends on equity markets, the anticipated regulatory changes affecting banks, and the evolving landscape of European defense spending.

ab 24 February 2025 Global Research First Read Apple Inc. $500B in investments in the US over 4 years? Call us a skeptic We think Apple's supply chain and financial model raises doubts around the $500B Apple announced it plans to spend and invest more than $500 billion in the US over the next four years including the hiring of around 20,000 people, of which the vast majority would be focused on R&D, silicon engineering, software development and AI/ML. While the headline figure on the surface is a large numb ...

Summary of Key Points from the Conference Call on China Property Industry Overview - **Industry**: China Property - **Date**: 24 February 2025 Core Insights and Arguments 1. **Policy Continuity Expected**: The National People's Congress (NPC) meeting starting on 5 March 2025 is anticipated to maintain the policy stance set in September 2024, focusing on property market stabilization, housing delivery, social housing supply, inventory buybacks, and a new real estate development model [1][4][6]. 2. **Local Government Reports**: Multiple local governments' 2025 work reports emphasize similar themes: property market stabilization, housing delivery assurance, social housing supply increase, urban village renovation, and inventory buybacks [2][6]. 3. **Project Completion Progress**: As of the end of 2024, 40% of delayed projects have been completed, which is seen as a positive sign for restoring homebuyer confidence [3][4]. 4. **Rental Market Pressure**: Despite improvements in property sales, rental prices in tier 1-2 cities remain under pressure, indicating ongoing challenges in demand-supply dynamics [2][15][31]. 5. **Destocking Timeline**: The property market destocking is expected to conclude by mid-2026, with key indicators being the stabilization of rental prices and secondary listings [2][15]. Important but Overlooked Content 1. **Social Housing Supply**: The increase in social housing supply in tier 1-2 cities is contributing to the decline in market rentals, highlighting a shift in housing policy focus [3][4]. 2. **Change in Sales Model**: Some local governments are shifting from a presale model to selling completed properties, which may negatively impact developers' return on equity (ROE) in the future [3]. 3. **Government Support for Developers**: The Shenzhen government has provided significant financial support to China Vanke, including a Rmb2.8 billion loan and plans for an additional Rmb4.2 billion loan, indicating a proactive approach to easing liquidity pressures in the sector [12]. 4. **Mixed Signals in Market Recovery**: While primary and secondary inventory destocking shows improvement, the rental market's downward trend suggests that the recovery may not be uniform across all segments [15][30]. Data Highlights - **Inventory Turnover**: Inventory turnover months in tier 1 cities have returned to historical averages, with tier 1 cities at 15 months and tier 2 cities at 20 months [16][22]. - **Secondary Listings**: Secondary housing listings in 50 cities stabilized at approximately 4.1 million units, with a year-over-year improvement from 30% in February 2024 to 8.6% in February 2025 [20][25]. - **Rental Listings Increase**: Rental listings in tier 1 cities rose by 19% since September 2024, while rental prices continue to decline [31][39]. Conclusion The conference call highlighted the ongoing challenges and policy responses in the Chinese property market, with a focus on stabilization efforts and the impact of government measures on housing supply and demand dynamics. The mixed signals in market recovery underscore the complexity of the current environment, necessitating close monitoring of future developments.

ab 24 February 2025 NIC pre-reported revenue, EBITDA & ending cash at their Dec-Q production update (link); the key incremental information from today's result included 1) the $204m impairment for HNI & RNI and 2) dividend of ~A1.5cps with DRP overlay. We refine our modelling assumptions around RKEF output and ENC ramp-up, taking into account the tentative commodity outlook with the market still in oversupply and (non- nickel) LFP batteries continuing to eek share from ternary batteries. This sees us downgr ...

Asia Pacific Equity Research 24 February 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. CATL Overweight "America First Investment Policy" implication Price: Rmb275.55 On February 21, 2025, the White House issued the America First Investment Policy Memo ...

ab 25 February 2025 Global Research First Read Japan Electric Components Sector Feedback from Asian investor trip We visited investors in Hong Kong and Singapore From 17-20 February, we visited investors in Hong Kong and Singapore and had the opportunity to participate in 28 meetings. Cautious views on the electronic components sector predominated throughout 2024. On this visit, there was still a strong sense of caution, but we could detect expectations, albeit slight, regarding a cyclical recovery and edge ...

February 26, 2025 INDUSTRY UPDATE On Jan 27, 2025, DeepSeek released R1, its LLM model that directly competes with OpenAI's o1 model in performance, although at a materially lower cost structure (if press reports are accurate). Like DeepSeek-V3, the R1 model has 671 billion parameters with a context length of 128,000. The release of DeepSeek-R1 resulted in downward pressure on many US tech stocks, owing to: RELEVANT DISCLOSURES BEGIN ON PAGE 346 OF THIS REPORT. Portfolio Strategy Artificial Intelligence Gen ...

24 February 2025 Equity Research Report China Technology Equities Servers: Riding on the wave of DeepSeek DeepSeek is driving Cloud capex in China. AI inferencing workloads have been surging, triggered by the growing popularity of DeepSeek R1 in recent weeks. We see that individual user demand has been growing, and the AI model has been increasingly deployed by enterprises and government entities. DeepSeek R1 model's innovations in algorithm reduce inferencing costs sharply and also lead to much less comput ...

Asia Pacific Equity Research 24 February 2025 China Cross-border Ecommerce Takeaways from expert call on the impact from new US tariff policies Andre Chang, CFA AC (86-21) 6106 6362 andre.ch.chang@jpmorgan.com SAC Registration Number: S1730520080002 Alex Yao (86 21) 6106 6505 alex.yao@jpmorgan.com SAC Registration Number: S1730523020001 J.P. Morgan Securities (China) Company Limited See page 3 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and see ...

Summary of the Investor Presentation on Greater China Tech Semiconductor Industry Overview - **Industry Focus**: Greater China Tech Semiconductor, specifically the AI semiconductor sector - **Key Drivers**: Positive outlook on cloud AI demand remains unchanged, with expectations of similar AI capital expenditure intensity from US Cloud Service Providers (CSPs) [1][2] Core Insights - **China AI Market**: A more constructive view on the China AI market, with MediaTek rated as Overweight (OW) [1][2] - **AI Semiconductor Demand**: The demand for AI semiconductors is expected to accelerate due to generative AI applications across various sectors [5] - **DeepSeek Impact**: The introduction of DeepSeek may trigger an edge AI replacement cycle, as it demonstrates cheaper inferencing capabilities [5] - **Supply Chain Dynamics**: The ramp-up of China’s foundry supply is becoming stronger and more sustainable, leading to a slower recovery in mature node foundry utilization [5] Financial Metrics and Valuation - **Valuation Comparisons**: - TSMC (Ticker: 2330.TW) has a current price of 1,080.0 TWD with a target price of 1,388.0 TWD, indicating a 29% upside [6] - MediaTek (Ticker: 2454.TW) has a current price of 1,500.0 TWD with a target price of 1,688.0 TWD, indicating a 13% upside [7] - **P/E Ratios**: - TSMC's P/E ratio is projected to decrease from 33.4 in 2023 to 17.7 in 2025, reflecting expected earnings growth [6] - MediaTek's P/E ratio is expected to improve from -35% in 2023 to 24% in 2025 [7] Market Trends - **AI vs. Non-AI Semiconductor Growth**: Non-AI semiconductor growth is projected at only 10% year-over-year in 2024, excluding NVIDIA's AI GPU revenue [9] - **Inventory Levels**: A decrease in semiconductor supply chain days of inventory is noted, which historically correlates with an increase in semiconductor stock prices [10][11] Long-term Demand Drivers - **Tech Diffusion**: The reacceleration of AI semiconductor demand is driven by the proliferation of generative AI across various industries [5] - **Tech Deflation**: Anticipated "price elasticity" is expected to stimulate demand for technology products [5] Additional Insights - **AI Computing Wafer Consumption**: Expected to reach up to $15.3 billion in 2025, with NVIDIA being the primary consumer [26] - **HBM Consumption**: Projected to reach up to 20.5 billion gigabits in 2025, with NVIDIA consuming the majority of the supply [29] This summary encapsulates the key points from the investor presentation, highlighting the positive outlook for the AI semiconductor sector in Greater China, the financial metrics of key players, and the broader market trends influencing the industry.