Global Research ab 13 February 2025 ASEAN Tech Tariff risk: which companies have the highest revenue exposure to the US? Geographical revenue breakdown of 23 companies in ASEAN The ASEAN tech sector is heavily reliant on exports for revenue. UBS ASEAN economist Grace Lim believes that Thailand and Malaysia could face relatively higher risks of direct or reciprocal tariffs if trade surpluses with the US are the key input, or if the US aims to equalize tariff rate differentials (though minimal to none for tec ...

China Internet Tencent Holdings Ltd Rating Outperform Price Target 700.HK 540.00 HKD 14 February 2025 Robin Zhu +852 2918 5733 robin.zhu@bernsteinsg.com Charles Gou +852 2918 5789 charles.gou@bernsteinsg.com Min-Joo Kang +852 2123 2644 minjoo.kang@bernsteinsg.com Charlie Peng +81 3 6777 6993 charlie.peng@bernsteinsg.com Tencent: Act III, scene 2 - the case for a strong 2025 Irons in the fire. Tencent remains one of our top picks in the sector, measured both on near- term earnings trends, and on medium term ...

Global Research ab 13 February 2025 China Pet Food Sector Jan 2025: leading companies' strong growth momentum continued Key brands online retail sales tracking Pet food online sales (Tmall, Douyin and JD) increased MSD YoY in Jan 2025, mainly driven by ASP growth, based on our channel check; Douyin's grew the fastest at nearly 20% YoY, followed by Tmall and JD. Gambol's growth momentum continued with online retail sales up 40% YoY in Jan. Its high-end brand, Fregate grew over 100% YoY and Myfoodie increased ...

ab 14 February 2025 Global Research Global Rates Strategy Fed balance sheet tweaks and QT forever? There have been many questions about changes to various Fed balance sheet line items These include the Treasury cash balance, the foreign RRP, and the gold stock. Any of the changes would boost reserves, which would keep QT going longer The Fed has said it will continue QT until reserves hit the "ample" level. If the Tsy cash balance or the Foreign RRP are lowered, it would create reserves that would keep QT g ...

Summary of the Conference Call Industry Overview - **Industry**: Telecommunications and Cable/Broadband Operators - **Companies Covered**: AT&T, Verizon, T-Mobile, Comcast, Charter, Lumen Key Points and Arguments 1. **Capex Growth for US Telecom Service Providers**: - Aggregate capex for US Telecom Service Providers increased by **22% year-over-year (y/y)** to **$14.3 billion** in **4Q24**. This growth is driving FY24 capex to **$48.0 billion**, which is better than expected, despite being a **-8% y/y** decline compared to FY23 [2][3] 2. **2025 Capex Projections**: - For **2025**, aggregate capex is projected to grow by **3% y/y** to **$49.5 billion**, slightly lower than previous estimates. T-Mobile is expected to increase capex by **8% y/y**, Verizon by **5% y/y**, while AT&T is expected to remain flat [3][4] 3. **Cable and Broadband Operators Performance**: - Aggregate capex for cable and broadband operators rose by **14% y/y** in **4Q24**, exceeding expectations. FY24 capex is now estimated at **$22.8 billion**, a **1% y/y** increase. For **2025**, capex is expected to rise by **7% y/y** to **$24.4 billion** [4][8] 4. **Mixed Trends Among Cable Operators**: - While Lumen and Charter are expected to increase spending y/y, Comcast is projected to have flat to declining capex [4][8] 5. **Equipment Suppliers Outlook**: - Equipment suppliers are anticipated to experience stronger rebounds compared to the overall capex recovery in 2025, due to easier comparisons from inventory digestion challenges faced in 2024 [2][4] Additional Important Insights 1. **Capex Tracker Updates**: - The capex tracker has been updated based on recent earnings reports from major telecom and cable operators, indicating a pull-forward in capital investments from **1Q25** into **4Q24** [2][3] 2. **Historical Capex Trends**: - Historical data shows fluctuations in capex for US Telcos, with a notable decline in 2023 followed by a recovery trajectory in 2024 and 2025 [8][12] 3. **Analyst Contact Information**: - Analysts involved in the report include Samik Chatterjee, Joseph Cardoso, Priyanka Thapa, and Manmohanpreet Singh, with their contact details provided for further inquiries [5][14] 4. **Investment Considerations**: - Investors are advised to consider the mixed trends in spending among different operators and the overall recovery in the telecom sector when making investment decisions [2][4] This summary encapsulates the key insights from the conference call, focusing on the performance and projections of the telecommunications and cable industries, along with specific company forecasts and trends.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the monetary policy landscape in China, particularly the People's Bank of China (PBOC) and its balancing act between financial stability and pro-growth easing [3][4][5]. Core Insights and Arguments - The PBOC has shifted its monetary policy stance to moderately loose from prudent, indicating a more proactive easing approach amidst domestic economic challenges [4][5]. - Despite expectations for significant policy rate cuts, the PBOC has prioritized financial stability, leading to elevated interbank repo rates and a delay in required reserve ratio (RRR) cuts [3][4][10]. - The central bank's recent actions reflect a long-standing dilemma: supporting economic growth through policy easing while maintaining financial stability, particularly in the context of foreign exchange (FX) management [5][6][24]. - The report forecasts two 50 basis point (bp) RRR cuts in Q1 and Q3 of 2025, alongside two 20bp policy rate cuts in Q2 and Q4, to address persistent deflationary pressures [3][31][35]. - The average RRR in China is currently around 6.6%, which is higher than in many major economies, suggesting room for further cuts [40]. Important but Overlooked Details - The PBOC's balance sheet shrank by RMB 1.6 trillion in 2024, raising concerns about monetary tightening, primarily due to a 100bp RRR cut that released RMB 2 trillion of liquidity [19][21]. - The report highlights that the PBOC's liquidity management strategy has evolved, with a shift from medium-term lending facilities (MLF) to increased use of reverse repos [17][20]. - FX stability remains a top priority for the PBOC, with the USD/CNY fixing kept below 7.20 to manage market sentiment amid ongoing US-China trade tensions [24][25]. - The anticipated fiscal package at the "Two Sessions" and accelerated government bond issuance are expected to facilitate RRR cuts, although the PBOC may opt for low-profile tools like reverse repos if bond market conditions worsen [10][35]. Conclusion - The PBOC's current monetary policy reflects a complex interplay of domestic economic needs and external pressures, with a cautious approach to easing that prioritizes financial stability over aggressive rate cuts [5][6][24].

14 February 2025 BYD (1211 HK/002594 CH) H/A: Buy/Buy: Autonomous driving the next volume driver Highway NOA and parking pilot to become a standard in 2025 new models. On 10 February, BYD launched 21 refreshed models for 2025 (priced at cRMB200k and below) with autonomous driving (AD) functions including highway navigate on autopilot (NOA) and parking pilot largely standardized, while the entry price remains the same. These RMB200k and below models have contributed c80% of BYD's 2024 volume (Exhibit 1). We ...

Summary of Semiconductor Production Equipment Industry Conference Call Industry Overview - The conference focused on the Semiconductor Production Equipment (SPE) industry, highlighting its attractive outlook as assessed by Morgan Stanley [1][4][28]. Key Companies Discussed - **Tokyo Electron**: Ranked 7th among Japanese companies by market value with a market cap of JPY 11,911 billion and FY23 sales of JPY 1,831 billion [3][6]. - Other notable companies include **Toyota Motor**, **Sony Group**, **NTT**, and **Mitsubishi UFJ Financial Group** [3][6]. Market Size and Growth - The global market size for Semiconductor Production Equipment is projected to reach **$102 billion** in 2023, with the overall semiconductor market valued at **$529 billion** [16][18]. - The SPE market is experiencing strong growth, with significant contributions from leading companies like ASML, Applied Materials, and Lam Research [19][75]. Market Share Insights - In 2023, the market shares for top SPE companies were as follows: - **ASML**: 15.8% - **Applied Materials**: 19.8% - **Lam Research**: 15.4% - **Tokyo Electron**: 13.2% [19][20]. - Japanese manufacturers maintain a competitive edge in both front-end and back-end processing equipment, with Tokyo Electron leading in several categories [66][69]. Technological Trends - The industry is witnessing a shift towards advanced packaging technologies, such as CoWoS (Chip on Wafer on Substrate) and HBM (High Bandwidth Memory), which are expected to drive future growth [83][84]. - The emergence of chiplet technology is also highlighted, allowing for more efficient chip designs and manufacturing processes [45][47]. Investment and Policy Environment - There is a pressing need for domestic investment in semiconductor manufacturing, particularly in light of geopolitical tensions and the desire to reduce dependence on Chinese manufacturing capabilities [58][59]. - The U.S. government is implementing restrictions on SPE exports to China, which is influencing market dynamics and investment strategies [58]. Financial Performance and Projections - The conference noted that companies like Disco and SCREEN HD are experiencing robust business growth, with expectations for sales to exceed initial forecasts due to high demand for advanced packaging equipment [83]. - The semiconductor market is projected to continue its upward trajectory, driven by technological advancements and increasing demand for electronic devices [28][30]. Conclusion - The Semiconductor Production Equipment industry is positioned for significant growth, supported by technological innovations and strategic investments. Companies like Tokyo Electron are well-placed to capitalize on these trends, making the sector an attractive investment opportunity [1][4][28].

Summary of Key Points from the Conference Call Industry Overview - The analysis focuses on the impact of tariffs on global earnings, particularly in the context of the ongoing trade tensions initiated by the Trump administration. The sectors most affected include manufacturing, specifically autos, tech hardware, and capital goods [1][6][57]. Core Insights and Arguments - **Tariff Impact on Earnings**: The direct impact of US tariffs on global earnings is estimated to be around 1% of global EPS, with a 10% effective tariff rate and a 30% absorption rate [5][47]. - **Sector Sensitivity**: Autos are projected to experience the highest earnings impact, estimated at 5.3%, followed by tech hardware at 4.5% [55][58]. Other manufacturing sectors may see impacts ranging from 1% to 2% [55]. - **Regional Exposure**: Latin America and Asia Pacific excluding Japan (APxJ) are expected to face the most significant EPS impacts, with Latin America seeing a potential decline of about 2% and APxJ around 1.7% under the same tariff conditions [45][52]. - **US Tariff Rates**: The US weighted tariff rate was 1.4% in 2017, increased to 3% in 2021, and is projected to be below 2.5% by 2023. Future tariffs are likely to target China, the EU, Mexico, and Vietnam due to their significant trade deficits with the US [2][20]. Additional Important Insights - **Global Sales Composition**: Approximately 37% of global sales are from manufactured goods, with about 13% potentially exposed to US tariffs. The exposure is highest for companies in the APxJ region [4][36]. - **Counter-Tariff Dynamics**: The analysis primarily focuses on US tariffs, as counter-tariffs from other countries are more challenging to quantify. The expectation is that tariffs will lead to a series of retaliatory measures, further complicating the trade landscape [36][43]. - **Long-term Trade Trends**: The report suggests that the current trade tensions may lead to a deglobalization trend, with protectionist policies becoming more prevalent across developed markets [20][31]. Conclusion - The analysis indicates that while the direct impact of tariffs on global earnings may be relatively small, the effects will be asymmetric across different sectors and regions. The sentiment and broader economic implications of these tariffs could drive market performance in the near term [45][58].

Summary of J.P. Morgan Oil Markets Weekly (February 13, 2025) Industry Overview - The report focuses on the global oil market, particularly the dynamics surrounding Brent crude oil pricing and Russian oil production amidst geopolitical tensions and sanctions. Key Points and Arguments Brent Crude Pricing Outlook - Brent crude is currently trading below the fair value estimate of $77 for February, with an anticipated average price of $73 for 2025, and a projected price trajectory reaching $80 by April-May before declining to the mid-$60s by year-end [1][1] - For 2026, a further decline in Brent prices is expected, with projections suggesting prices below $60 by year-end and an average forecast of $61 [1][1] Demand and Supply Dynamics - A robust demand growth of approximately 1.1 million barrels per day (mbd) is anticipated for 2025, followed by an additional 1.3 mbd in 2026, aligning with historical trends [1][1] - This demand growth is expected to be offset by strong non-OPEC supply growth, particularly from deep-water production [1][1] Geopolitical Factors - The outlook assumes a ceasefire between Russia and Ukraine, influenced by potential peace talks under a Trump administration, which could lead to increased global oil demand in 2026 [1][1] - Recent developments, including a phone call between Trump and Putin, have led to a temporary increase in oil prices, reflecting market expectations of negotiations potentially lifting Western sanctions on Russian energy [1][1] Russian Oil Production Insights - The assumption that a ceasefire will lead to a resumption of large-scale Russian oil flows is considered misplaced; Russia is likely cutting production as part of its OPEC+ commitments rather than in response to sanctions [2][2] - Current spare capacity in Russia is estimated at around 350 kbd, limiting its ability to regain market share compared to Saudi Arabia, which has a spare capacity of 1.5 mbd [5][5] Sanctions and Market Impact - The latest sanctions are expected to have a limited impact on Russian oil shipments, primarily resulting in shifts in trade flows rather than significant production changes [7][7] - Despite sanctions, Russian oil flows have remained resilient, although some deliveries have not been completed [8][8] Refinery Operations and Challenges - Russian refinery runs have faced challenges, averaging 5.3 mbd in January, below pre-war levels, with ongoing drone strikes affecting refinery capacity [22][22] - The Ryazan refinery is expected to restart operations by February 17, while other facilities face longer shutdowns [23][23] Future Production Constraints - Medium-term production constraints for Russia are attributed to halted greenfield developments and exploration over the past four years due to COVID and the ongoing war [27][27] - A ceasefire could theoretically increase Russian oil production by 1.0-1.5 mbd, but fiscal constraints and taxation policies make this unlikely [28][28] Additional Important Insights - The report highlights the adaptability of Russian oil operations despite sanctions and damage to refineries, with a focus on maintaining production within the OPEC+ framework [26][26] - The price of Urals crude has dropped below the $60/bbl price cap, indicating a significant discount and prompting sellers to adjust pricing strategies [17][17] This comprehensive analysis provides insights into the current state and future outlook of the oil market, emphasizing the interplay between geopolitical factors, production dynamics, and pricing trends.