China: Two Sessions Comment 1: 2025 economic targets in line, while government bond issuance quota missed Bottom line: 5 March 2025 | 1:22PM HKT 2. On fiscal numbers, the 2025 official on-budget fiscal deficit target is in line with Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Lisheng Wang +852-3966-4004 | lisheng.wang@gs.com Go ...

6 March 2025 | 10:18PM HKT China: Two Sessions Comment 3: Top policymakers reiterated supportive stance and provided some more implementation details Bottom line: This afternoon (6 March), the heads of the National Development and Reform Commission (NDRC), Ministry of Finance (MOF), Ministry of Commerce (MOFCOM), PBOC and China Securities Regulatory Commission (CSRC) held a joint press conference on 2025 economic policies. Top policymakers reiterated their supportive stance and provided some more implementa ...

Main points: China: Two Sessions Comment 2: Fiscal expansion to do (most of) the heavy lifting for stabilizing growth Bottom line: The 2025 fiscal targets unveiled during the "Two Sessions" imply the total amount of government bond net issuance quota will increase to RMB11.9tn in 2025 from RMB9.0tn in 2024. According to the 2025 budget report proposal, the MOF expects fiscal revenue growth to slow, but fiscal expenditure growth to increase, both by a moderate degree. We see downside risk to the MOF projecti ...

Investment Rating - The report does not explicitly provide an investment rating for the industry but highlights significant revenue growth in AI infrastructure-related companies, indicating a positive outlook for investment opportunities in this sector [2][3]. Core Insights - There is a notable divergence between the annualized revenue growth of public companies involved in AI infrastructure, which increased by over $340 billion from 2022 to Q4 2024, and the real investment in AI-related categories in the US GDP, which only rose by $42 billion during the same period [2][3]. - The report suggests that a substantial portion of the revenue increase is attributed to cost inflation and foreign revenue, which do not contribute to real GDP growth [6][9]. - Methodological issues in the US national accounts may lead to an underestimation of the impact of AI-related investments on real GDP, with an estimated potential understatement of around $100 billion [2][10]. Summary by Sections Revenue Growth - Annualized revenue for public companies exposed to AI infrastructure build-out increased by over $340 billion from 2022 through Q4 2024, with projections suggesting a further increase to $580 billion by the end of 2025 [2][3]. - The increase in real investment in AI-related categories in the US GDP accounts was only $42 billion during the same period, raising questions about the apparent disconnect between revenue and GDP growth [3][4]. Cost Inflation and Foreign Revenue - A significant portion of the revenue increase is driven by cost inflation, particularly in semiconductors, and foreign sales, which account for nearly half of the reported AI spending surge [6][9]. - Margin expansion is estimated to explain around $30 billion of the overall revenue increase, with foreign revenue contributing approximately $130 billion [9][17]. Methodological Considerations - The report discusses the commodity-flow approach used in US national accounts, which may misclassify semiconductor purchases as intermediate inputs rather than investments, leading to an underrepresentation of actual investment in GDP [11][12]. - The surge in cloud services used for AI model training is also likely underreported in GDP calculations due to their classification as intermediate inputs [14][15]. - The report concludes that while there is potential for AI-related investment to provide a moderate boost to real US GDP in 2025, much of the investment in semiconductors and cloud computing will likely remain unmeasured unless there are changes in national accounting methodologies [22].

7 March 2025 | 7:37AM HKT The 720: JD.com, China Two Sessions, China Brokers, Adani Port, Asics, Ryohin Keikaku, SK Hynix, European Strategy In Focus | JD.com Caleb Chan +852-2978-0790 | caleb.chan@gs.com Goldman Sachs (Asia) L.L.C. c45a43530f604d12bcb9a82b5aa6b9f6 Goldman Sachs The 720 JD.com - 4Q24 First Take: Strong beat with JD Retail market share gains; eyes on 2025 outlook - Buy (on CL). JD reported strong 4Q24 results beat above GS and sell-side estimates (V.A.) across top line, profit growth and fre ...

Investment Rating - The report does not explicitly state an investment rating for the industry [1] Core Insights - The report highlights that broad fiscal targets are in line with expectations, but the special bond issuance quota has been missed, indicating potential challenges in fiscal policy implementation [7] - It emphasizes that total fiscal support is crucial for economic stability and growth, suggesting that the effectiveness of fiscal measures will significantly impact the industry [9] - The report discusses uncertainties surrounding US tariffs and their potential impact on trade dynamics, particularly a 20% increase in tariffs this year, which could affect the industry significantly [15] Summary by Relevant Sections - **Fiscal Policy**: The report notes that while broad fiscal targets are met, the failure to meet special bond issuance quotas could hinder economic support [7] - **Economic Support**: It stresses the importance of total fiscal support in driving economic recovery and stability, indicating that the current measures may not be sufficient [9] - **Trade Dynamics**: The report outlines the implications of increased US tariffs on China, which could lead to significant shifts in trade patterns and affect the industry adversely [15]

MACRO: WHAT IS VULNERABLE IN ASIA TO THE FALL IN NVIDIA 宏观：亚洲在英伟达下跌中脆弱的是什么 Last week we looked at the correlations of Asian companies with Bitcoin and showed what seemed to be surprisingly high correlations. We suggested that these correlations were happening as a result of excess liquidity which has been declining since November as a result of the fiscal debt freeze, contraction of global central bank balance sheet, the unwind of the yen carry trade and USD strength caused by tariff concerns. A rise in rea ...

3 March 2025 | 9:10PM GMT Growth expectations across markets have been repriced sharply lower already (Exhibit 3). While the reset in expectations happened across regions, it was sharper in the US, which switched from being the region with the strongest (in late January) to the one with the lowest growth pricing. This re-set growth pricing has been broad across US sentiment reset - weaker growth expectations drive more non-US outperformance assets (Exhibit 4). For example, 10y inflation swaps moved lower ac ...

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28 February 2025 | 8:50PM GMT Commodity Analyst Commodity Investing 101 n Stronger case for commodities futures, but choose wisely. The decade following the financial crisis offered only muted commodity returns amid a below-potential economy— due to deleveraging and restrictive fiscal policy—, unusually low inflation, and highly globalized supply chains. Today's environment offers a more favorable backdrop for commodities with less slack in the economy — and supportive fiscal policy —, the move to reshoring ...