FICC Research Credit & Macro Research 10 January 2025 EM Flows New year, same pattern The first week of 2025 brought little 'new' news for EM bond fund flows. EM credit funds saw more outflows, similar in size to the elevated levels of December. Again, outflows were concentrated in ETF products. In contrast, inflows into local-currency EM bond funds accelerated with one of the largest weekly volumes recorded over the past 12 months. For equity fund flows, the year started more upbeat, however. After three w ...

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Polysilicon - The polysilicon industry cycle is believed to have hit the bottom, but immediate recovery is not visible. There are both positive and negative events anticipated in 1Q/2Q25 that may provide trading opportunities [2][4] Core Insights - **Negative Outlook**: - Significant impairment losses are expected for polysilicon producers in 4Q24, leading to worse-than-expected earnings for FY24. By the end of 2024, polysilicon inventory levels continued to rise, with prices under pressure at approximately Rmb 40/kg [4][2] - Producers have been reducing production capacity utilization throughout 2024, which may lead to impairment risks for production facilities [4] - **Positive Outlook**: - Polysilicon prices may overshoot in mid-to-end 2Q25 due to declining supplies and decreasing inventory levels. Major producers have reduced capacity utilization to support prices [4] - Expected polysilicon supply in January 2025 is projected at 98,000 tons, while demand is estimated at 101,000 tons, indicating a potential inventory reduction in the coming months [4][6] Company Ratings - **Daqo (DQ US)**: - Rated Overweight (OW) due to cost leadership, strong balance sheet, and attractive valuation at 0.3x FY25 Price-to-Book Value (P/BV) [4][9] - **Tongwei (600438 CH)**: - Rated Underweight (UW) due to high valuation at 1.7x FY25 P/BV [4][9] Additional Insights - The current polysilicon inventory is estimated to be between 300,000 to 400,000 tons, and it takes approximately 2 to 3 months for a polysilicon plant to resume production, indicating a potential time gap for any supply increase [4] - The report emphasizes the importance of monitoring inventory levels and production capacity as key indicators for future price movements in the polysilicon market [4][2] Conclusion - The polysilicon industry is at a critical juncture with potential trading opportunities arising from both negative and positive developments. Investors should closely watch the earnings reports and inventory levels as indicators of market direction [2][4]

Summary of Key Points from the Conference Call Industry Overview - **Fiscal Deficit in China**: The size of China's fiscal deficit is expected to increase significantly in 2025, as stated by Vice Minister of Finance Mr. Liao Min. The ministry plans to use financial tools to expand domestic consumption and enhance the consumer goods trade-in program this year [5][5][5]. Real Estate Market - **Guangzhou Home Transactions**: Existing home transactions in Guangzhou reached their highest level in the past three years, totaling 96,016 homes in 2024, which is a 10.4% year-over-year increase. This surge is attributed to a series of stimulus measures and loosened policies for the real estate sector [5][5][5]. Automotive Industry - **Tesla Model Y Launch**: Tesla officially launched a revamped version of the Model Y in China, priced from RMB 263.5k, which is 5.4% more expensive than the previous version [5][5][5]. - **US Regulations on Chinese Vehicle Software**: The Biden administration is expected to finalize rules that will curb access to China's vehicle software and hardware, citing national security concerns [5][5][5]. Technology Sector Developments - **Pinduoduo Merchant Rights Committee**: Pinduoduo has established a committee to protect merchant rights on its platform, aiming to address merchant needs and enhance service mechanisms [8][8][8]. - **XPeng's New SUV Model**: XPeng has revealed images of its upcoming mid-sized SUV model G7, which is expected to be competitively priced under RMB 250k [8][8][8]. - **Tencent's Share Sales**: Tencent sold 62.1 million shares of Weimob and also divested shares in Ubtech Robotics, while maintaining a mutually beneficial relationship with Weimob [8][8][8]. Other Notable News - **Shein's London Listing Plans**: Shein is reportedly aiming to list in London in the first half of 2025, with potential regulatory approvals being discussed during a visit by the UK Finance Minister [8][8][8]. - **Chery and NIO Partnership**: Chery's sub-brand Exeed plans to release its first battery swap-compatible model in partnership with NIO in Q3 [8][8][8]. - **Bilibili's Lunar New Year Gala Broadcast**: Bilibili will broadcast the annual CCTV Lunar New Year Gala for the first time in 2025 [8][8][8]. Conclusion The conference call highlighted significant developments in China's fiscal policy, real estate market, automotive industry, and technology sector, indicating a dynamic landscape with both opportunities and challenges for investors.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: US Consumer Electronics - **Event**: CES 2025 Highlights Core Themes and Insights 1. **Autonomous Vehicles**: - A significant presence of autonomous vehicle companies, particularly from China, with Waymo leading the exhibit. - Notable mention of Xpeng showcasing a flying car, indicating a positive mood in the sector [2][2]. 2. **Robotics**: - Increased focus on both industrial and humanoid robots designed for home tasks, such as cleaning and companionship. - The Unitree humanoid robot, likened to Boston Dynamics, received particular praise for its capabilities [2][2]. 3. **Augmented Reality (AR) Glasses**: - High interest at booths, with long lines for demonstrations. - Some products, like Xreal, were well-received, while others faced criticism for technical limitations, such as requiring additional masks to block backgrounds [2][2]. 4. **Digital Twins**: - Enhanced discussions around digital twin technology, aligning with Nvidia's strategic vision, indicating a growing trend in this area [2][2]. 5. **AI-Embedded TVs**: - Strong consumer interest in televisions featuring AI technology, with Samsung and LG showcasing models integrated with Microsoft and Google Gemini. - LG's transparent OLED display was highlighted as a standout innovation [2][2]. Additional Important Insights - The overall atmosphere at CES 2025 was described as uplifting, reflecting optimism in the consumer electronics sector. - The presence of various startups and established companies indicates a competitive landscape with rapid technological advancements [2][2]. This summary encapsulates the key themes and insights from the CES 2025 conference call, focusing on the advancements and trends within the US consumer electronics industry.

Industry and Company Overview * **Industry**: China Software and IT Services * **Focus**: GenAI, AI adoption, and its impact on various sectors * **Key Companies**: Kingsoft Cloud, iFlytek, Kingsoft Office, VNET, Envicool, Huawei, Xiaomi, ByteDance, and others Key Points 1. GenAI Progress and Adoption * **GenAI Models**: Chinese GenAI models, such as ByteDance Doubao and DeepSeek v3, have shown significant improvements in reasoning and multimodality capabilities, closing the gap with global leaders like OpenAI's GPT-4. * **Training Efficiency**: Innovations in software and hardware have significantly reduced the training and inferencing costs of GenAI models, making them more accessible and cost-effective. * **AI Adoption**: AI adoption is expected to accelerate in 2025, driven by improved model performance, lower costs, and increased user comfort with AI-enabled interfaces and applications. 2. AI Cost Efficiency and Industry Participation * **Cost Efficiency**: Lower AI costs are expected to attract more industry participants and users, leading to a flourishing AI ecosystem. * **Vertical and Light-Edge Models**: These models provide cost-effective and customizable solutions for various industry customers and consumer electronics, further driving AI adoption. 3. Well-Positioned Companies * **Kingsoft Cloud**: Benefits from robust AI compute demand, especially from Xiaomi's investments in edge AI and autonomous driving. * **Kingsoft Office and iFlytek**: Beneficiaries of faster AI penetration in cloud and edge applications. * **VNET**: Market share winner in the data center market, riding the AIDC demand from hyperscalers. 4. AI CapEx and Data Centers * **AI CapEx**: Expected to increase in 2025 due to competition among tech giants and usage spikes. * **Data Centers**: Third-party IDC demand is expected to recover driven by hyperscalers' GenAI investments and stable in-house IDC construction. * **Envicool**: Well-positioned to gain market share in liquid cooling due to increasing demand for high-power-density IDCs. 5. AI Adoption in Consumer and Enterprise Markets * **Consumer Market**: AI adoption is rapidly ramping up, with consumer electronics becoming a new battleground. Examples include AI-enabled wearables, toys, notepads, and smart car cockpits. * **Enterprise Market**: More AI projects are moving from proof of concept to production, with SOEs taking the lead. Finance, energy, telcos, manufacturing, and healthcare industries are leading the AI adoption. 6. Agentic Workflow and AI Commercialization * **Agentic Workflow**: LLMs are being optimized for agentic workflows, enabling more reliable and efficient AI applications. * **AI Commercialization**: AI commercialization among enterprise software companies is at an early stage, with many companies offering free AI features to encourage user engagement and pilot projects. 7. Valuation and Risk * **Valuation**: The China software sector is currently trading at a discount compared to its historical average PE, reflecting investor concerns over limited access to advanced GPUs and lower willingness to pay for software and AI applications amid macro pressures. * **Risk**: Investing in the technology and AI sector involves a high degree of risk, including rapid technological changes, increasing competition, and exposure to macroeconomic cycles.

ab 10 January 2025 Powered by YES UBS Evidence Lab Global Research China 360 Household habits - new survey insights Smaller cities more upbeat In most categories, the share of consumers spending more in the past six months has been stronger in tier-3 cities than tier-1/2. In some segments, the trends clearly diverge: while the data suggest a rebound in the share of tier-3 consumers spending more on baijiu, this figure barely budged in higher-tier cities. The same pattern is evident in beer and soft drinks, ...

Summary of Key Points from the Conference Call Industry Overview - **Sustainability and Clean Energy**: The report discusses various aspects of sustainability, including carbon markets, digital infrastructure, and the implications of US elections on environmental policies. [1][3][26] Core Insights and Arguments - **Powering Digital Infrastructure**: There is a significant demand for de-bottlenecking solutions in power generation, particularly for data centers. A projected shortfall of approximately 36 gigawatts (GW) in US power access for data centers is anticipated from 2025 to 2028, potentially growing to 60 GW by 2029. Solutions include siting data centers at operational natural gas and nuclear plants, and converting crypto sites to data centers. [17][18] - **Natural Gas-Fired Power Generation**: The report highlights the growing demand for new natural gas-fired power generation, particularly in regions with favorable policies. Companies like GE Vernova, Siemens Energy, and Mitsubishi Power are identified as beneficiaries of this trend. [18] - **Power Additionality**: The concept of "additionality" is becoming crucial for data centers, emphasizing the need for new power generation sources to accompany new demand. This is particularly relevant for nuclear and Small Modular Reactors (SMRs) as clean power solutions. [19][21] - **SMRs and Nuclear Power**: Interest in SMRs is increasing, driven by partnerships with major tech companies. However, new nuclear generation is not expected to meet immediate power needs for data centers in the near term. [22] - **US Elections Impact**: The report discusses the implications of the recent US elections on environmental policies, with a focus on the potential for ESG-related litigation and the fate of the Inflation Reduction Act (IRA). [26][27] - **Carbon Markets Developments**: The report outlines advancements in voluntary carbon markets, including new UK principles and EU certification frameworks. Demand for carbon removal technologies is expected to grow, with a projected increase in global carbon capture capacity. [4][39][41] - **COP29 Outcomes**: Key pledges from COP29 include commitments to increase energy storage capacity and climate financing, with developed countries aiming to triple climate financing to developing nations by 2035. [49][51] Additional Important Insights - **European Regulations**: The report highlights significant changes in European regulations, including revisions to the Packaging Waste Directive and delays in the EU Deforestation Regulation. These changes could impact various sectors, including consumer staples and packaging. [66][67] - **Investor Sentiment**: Investors are cautious about the potential rollback of environmental regulations under the new US administration, but there is a consensus that a full repeal of the IRA is unlikely. [27][32] - **Sustainability DiGest Series**: A new research series has been initiated to explore various sustainability topics, including climate resilience, circular economy, and water sanitation challenges. [5][59] This summary encapsulates the key points discussed in the conference call, providing insights into the current trends and future outlooks in sustainability and clean energy sectors.

FICC Research Economics 10 January 2025 US Outlook When tempest tossed, embrace chaos Winds are blowing, literately and figuratively, intensifying uncertainty about what the flood of upcoming policy announcements on January 20 will mean for activity and rates. With activity resilient and disinflationary confidence intact, the FOMC seems content to downplay rate hikes. As the page turns to 2025, a figurative tempest... Much has happened since our most recent publication, on December 20, living up to expectat ...

Summary of the Thematic Equity Strategy Conference Call Industry and Company Overview - The conference call focuses on the **US Growth** sector, particularly the **NASDAQ-100** index and its associated stocks, emphasizing the **Growth at a Reasonable Price (GARP)** strategy. Core Points and Arguments 1. **Reverse DCF Framework**: The reverse DCF approach is utilized to assess growth rates that markets may be pricing into stocks, which helps define the GARP strategy. This method involves making assumptions about discount rates and terminal multiples to solve for cash flows that equate net present value to price [1][2][28]. 2. **Market Volatility**: The current market setup indicates a high percentage of NASDAQ-100 market capitalization is facing difficult implicit growth setups, leading to expectations of increased volatility in the US Growth sector [3][30]. 3. **GARP Strategy**: During periods of volatility, the GARP strategy is emphasized, focusing on stocks where consensus estimates align or exceed market-implied growth rates, potentially reducing reliance on continuous earnings beats to outperform [4][10]. 4. **Citi Research Baskets**: Citi has created three GARP baskets based on reverse DCF screening for the NASDAQ-100 and top growth themes, including AI, Digital Leisure, FinTech, Video Gaming, and Wearable Tech [5][12]. 5. **Magnificent 7 Analysis**: The analysis of the "Magnificent 7" (META, AMZN, GOOGL, AAPL, MSFT, NVDA, TSLA) shows varying growth setups, with META having the least onerous setup, while AAPL, MSFT, and TSLA may require stronger performance to meet market expectations [6][35]. 6. **S&P 500 Outlook**: A target level of 5700 for the S&P 500 is suggested to balance risk-reward dynamics, with a current fair value range around 5500 [8]. 7. **Interest Rate Impact**: The higher valuation segment of the market, particularly the NASDAQ-100, is facing headwinds from rising interest rates, contributing to a more significant pullback compared to the broader S&P 500 [9]. 8. **Valuation Metrics**: The NASDAQ-100 is currently at top decile valuation levels, with forward earnings growth expectations also at 20-year highs, leading to a middling PEG ratio compared to historical data [13][14]. 9. **Growth Themes Performance**: The top growth themes (AI, Digital Leisure, FinTech, Video Gaming, Wearable Tech) are highlighted for their attractive growth trajectories and reasonable valuations, although AI is noted to have the toughest growth setup [40][46]. Important but Overlooked Content 1. **Market-Implied Growth Setup**: The current market-implied growth expectations for the NASDAQ-100 are more challenging than in previous years, indicating a need for stocks to exceed analyst expectations to perform well [27][30]. 2. **Sector Allocations**: The sector allocations within the GARP baskets reveal a significant concentration in Information Technology, particularly in the cap-weighted basket [59][66]. 3. **Investment Strategy**: Investors are advised to selectively add growth names on pullbacks, with an acknowledgment of potential volatility ahead, suggesting a cautious approach to broader positioning [67]. This summary encapsulates the key insights and strategic recommendations from the conference call, providing a comprehensive overview of the current landscape in the US Growth sector and the NASDAQ-100 index.

J P M O R G A N Global Markets Strategy 11 January 2025 The J.P. Morgan View All Eyes on US: Balancing the AI Cycle, Trump Policies and a Narrowing Fed Path; Special Focus on Japan The broad and dominant theme of our 2025 macroeconomic and markets outlook remains the continuation of US exceptionalism. This should be reinforced this year by the AI theme, potential deregulation and changes in trade, fiscal and energy policies. Technological innovation and the broadening of the AI cycle will remain an importan ...