ab 12 February 2025 Global Research China Semiconductors Initial implications of DeepSeek and China's AI progress Three major implications of DeepSeek for China's tech supply chain Mainly stimulated by DeepSeek and improved investor sentiment, the China semi stock index has risen 7.5% after Chinese New Year, outperforming the HS300/SOX indexes by 5.3ppt/2.8ppts. We think DeepSeek has shown real AI computing innovation cost efficiently, and we believe more AI propagation is positive for AI computing spending ...

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Global supply chains are increasingly vulnerable due to geopolitical tensions, resource constraints, and operational disruptions, necessitating a focus on resilience as a competitive advantage [1][3][4] - Organizations must adapt to an era of uncertainty by embedding resilience into their supply chain strategies, which includes diversifying supplier networks and enhancing visibility [9][12][19] - The report identifies six critical areas for building supply chain resilience: geopolitical and economic volatility, supply chain concentration and visibility, operational disruptions, natural disasters and health risks, ESG compliance, and IP and cybersecurity risks [6][24][28] Summary by Sections Geopolitical and Economic Volatility - Geopolitical tensions, such as trade wars and tariffs, significantly impact supply chains, requiring companies to proactively monitor and diversify their supplier networks [9][10][11] Supply Chain Concentration and Visibility - Many companies lack visibility beyond Tier 1 suppliers, creating risks; thus, enhancing supply chain transparency and utilizing digital tools for better understanding is essential [12][13] Operational Disruptions - Operational risks are heightened by demand shifts, labor shortages, and logistics challenges; businesses should adopt proactive strategies using predictive analytics and scenario planning [15][16][18] Natural Disasters and Health Risks - Climate change and health crises pose significant threats to supply chains; companies must assess their exposure and develop robust crisis response protocols [19][20] ESG Compliance and Quality Pressures - ESG considerations are critical for long-term strategy; companies must align their supply chains with sustainability goals and ensure compliance to avoid reputational damage [24][25][26] IP and Cybersecurity Risks - The interconnected nature of supply chains increases the risk of IP theft and cyberattacks; companies need to implement strong cybersecurity measures and risk management frameworks [28][31][32]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - Electrification is a cornerstone for future strategies in the Aerospace & Defense industry, aiming to lead the sustainable aviation revolution [6] - The demand for sustainability, regulatory pressure, and advancing technologies are driving the transformation of propulsion systems in the industry [7] - Key players are investing in hybrid-electric, full-electric, and hydrogen-powered aircraft to meet net-zero emissions goals [7] Summary by Sections Introduction - The report emphasizes the importance of electrification in achieving sustainable aviation [5][6] Industry Innovation Impact Insights - Electrification is transforming the Aerospace & Defense industry, with a focus on sustainability and regulatory compliance [7] - Strategic challenges include battery technology, infrastructure development, and scalability [8] A&D Innovation Insights - Partnerships between OEMs, tech companies, and governments are crucial for accelerating innovation in electric aviation [9] - Key innovations include energy storage, hybrid-electric solutions, hydrogen fuel cells, and AI-enabled propulsion systems [10] Startups to Lookout For - Notable startups include Aerovy, Hypersonix, and Eviation Alice, which are pioneering innovations in electric aviation and propulsion systems [69][70] Future of Aircraft Electrification - The report discusses potential future developments such as modular aircraft propulsion systems and battery leasing models [73][74] - Regulatory innovations like geo-fenced electric-only air corridors could promote the adoption of electric aircraft [75][76]

Investment Rating - The report does not explicitly provide an investment rating for the industry under study Core Insights - The study investigates the impact of digital labor-market platforms on employment outcomes for recent graduates in Mozambique, highlighting gender disparities in platform usage and effectiveness [1][6][13] - Digital platforms like Emprego and Biscate are analyzed, with findings indicating that while men benefit from these platforms, women show lower responsiveness and higher reservation wages, suggesting potential perpetuation of gender disparities in labor markets [11][13][8] - The research employs a randomized encouragement design to assess the effectiveness of these platforms, revealing that overall treatment effects on employment outcomes are close to zero, with some positive impacts noted for men using Biscate [11][13] Summary by Sections Introduction - Youth employment is a significant concern in Africa, with high rates of unemployment among young individuals, attributed to labor-market frictions and structural challenges [2][6] - Digital platforms are expected to reduce job search costs and improve employment matches, but face challenges such as congestion and information asymmetries [5][6] Study Design - The study focuses on graduates from Technical and Vocational Educational and Training (TVET) institutes in Mozambique, utilizing a longitudinal survey to track employment outcomes [9][14] - Two platforms are compared: Emprego for formal jobs and Biscate for informal task-based work, with the aim of understanding their relative effectiveness [8][17] Results - The analysis shows that while digital platforms have the potential to improve employment outcomes, the actual impact varies significantly by gender, with men experiencing more favorable outcomes than women [11][13] - The nudges to encourage platform registration resulted in increased usage, particularly for Biscate, but overall employment outcomes remained low across both platforms [45][46] - The study concludes that digital platforms can have complex and gender-differentiated effects, influenced by existing social norms and the nature of the labor market segment they target [13][8]

Investment Rating - The report does not explicitly provide an investment rating for the industry or sector discussed Core Insights - The World Bank Group (WBG) aims to support Azerbaijan in transitioning to a more dynamic and greener growth model, focusing on enhancing resilience, sustainability, productivity, and job creation [13][16] - Azerbaijan's economic growth has slowed, necessitating a shift from hydrocarbon dependency to a diversified economy that includes renewable energy sources [14][15] - The government has set ambitious climate targets, including a 35% reduction in greenhouse gas emissions by 2030 and increasing renewable energy to 30% of the energy mix by 2030 [15][35] Summary by Sections I. Introduction - The Country Partnership Framework (CPF) outlines WBG's engagement in Azerbaijan for FY25-29, aligning with the government's socio-economic development strategy [13] II. Country Context and Development Agenda - **Social and Political Context**: Azerbaijan remains politically stable under a centralized government, with ongoing discussions for a peace agreement with Armenia that could enhance regional trade [18][19] - **Recent Economic Developments and Outlook**: Economic growth has averaged 1.7% annually since 2010, with a significant decline in the hydrocarbon sector, while the non-energy sector has shown growth [23][29] - **Poverty and Shared Prosperity**: The national poverty rate has stabilized around 5%, but rural areas face higher poverty levels and income vulnerability [31] - **Development Agenda**: The economy's heavy reliance on hydrocarbons and state involvement necessitates a new growth model driven by the private sector and economic diversification [36][39] III. World Bank Group Partnership Framework - **Government Program and Medium-term Strategy**: The government's development goals focus on economic diversification, social equity, and environmental sustainability [48] - **Proposed WBG Partnership Framework**: The CPF aims to leverage lessons learned from past engagements to foster a competitive, inclusive, and sustainable economy [30][49]

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The rehabilitation of 2,500 km of major roads in Tanzania was evaluated for its impact on rural livelihoods, revealing that while transportation costs decreased, rural households faced adverse effects such as reduced agricultural income and increased competition [1][7][52]. Summary by Sections Introduction - Spatial isolation is a significant contributor to poverty, with 80% of the extreme poor living in rural areas. Only 34% of rural Sub-Saharan Africans live within 2 km of an all-season road, highlighting the need for infrastructure investment [2][6]. Context - Agriculture is the main livelihood for over two-thirds of Tanzanians, accounting for 70% of their income. The road upgrading program aimed to enhance rural economies and reduce poverty by improving access to markets [15][20]. Road Upgrading Program - The program focused on upgrading roads in poor condition, with 6,000 km planned for improvement. By the end of 2013, 2,564 km of roads were paved, significantly improving Tanzania's infrastructure ranking [23][25]. Data - The analysis utilized geolocated road data from TANROADS and household panel survey data from LSMS-ISA, covering 3,265 households across Tanzania [26][34]. Estimation Strategy - A difference-in-difference estimation approach was employed, controlling for household fixed effects and using propensity score matching to create comparable treatment and control groups [38][41]. Results - The findings indicated that rural households experienced a decrease in rice prices and agricultural income, while non-farm work increased. There was no significant evidence of migration due to the road upgrades [52][56].

Investment Rating - The report emphasizes the importance of Twin Transformation, which integrates AI and sustainability, as a strategic imperative for organizations to achieve competitive advantage and positive societal impact [1][13]. Core Insights - Organizations that pursue AI and sustainability transformations simultaneously can create strong synergies, referred to as Twin Transformation, which enhances both digital and sustainable initiatives [1][4]. - AI serves as a powerful tool for optimizing resource use, mitigating environmental risks, and scaling sustainable practices, while sustainability provides a framework for guiding digital advancements [2][4]. - The report identifies six shared success factors for AI and sustainability transformations, including commitment to change, leadership buy-in, robust governance, data readiness, employee engagement, and balancing efficiency with innovation [25][29]. Summary by Sections Drivers for Change - External pressures from customers, investors, governments, and employees are reshaping expectations for organizations to innovate at the intersection of technology and environmental responsibility [9][10]. - Consumer demand for impact-driven brands is increasing, with 72% prioritizing eco-friendly products and 73% expecting AI to drive positive change [14][10]. Benefits of Twin Transformations - The integration of AI and sustainability can lead to improved ROI on sustainability investments, purpose-driven organizational change, end-to-end visibility, faster innovations, and optimized resource utilization [13][16]. - A case study highlights a major retailer reducing food waste by over 50% through AI-driven insights, demonstrating the practical benefits of Twin Transformation [19]. Success Factors - The report outlines critical success factors for effective transformations, including commitment to change, leadership support, robust governance, data readiness, employee engagement, and balancing efficiency with innovation [25][29]. - Unique factors for AI transformations include technical expertise and adaptability, while sustainability transformations require regulatory alignment and stakeholder collaboration [29][39]. Public Sentiment Analysis - The sentiment analysis indicates a largely neutral or positive perception of AI and sustainability, with social media fostering a more favorable sentiment compared to traditional news outlets [31][30]. - Discussions around AI's transformative potential in sustainability and healthcare innovation are prevalent, while concerns about environmental impacts and regulatory challenges also exist [32][34]. Navigating Complexities - Organizations must address challenges such as AI's environmental impact, the need for ethical AI governance, and the gap between AI advancement and sustainability progress to fully realize the benefits of Twin Transformation [38][39][43]. - The report emphasizes the importance of structured approaches and strategic alignment to navigate these complexities effectively [44].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The Gulf States are experiencing a significant transformation in digital banking, driven by neobanks and modernization efforts from traditional banks, creating a dynamic hub for financial innovation [8][9] - Key trends include the rise of digital-only neobanks, government initiatives supporting innovation, and increasing customer demand for seamless digital experiences [10][11] - The report emphasizes the importance of aligning banking practices with Islamic principles, catering to both local and global audiences [28][31] Summary by Sections Features Radar - The report presents a comprehensive overview of banking features and functionalities in the Gulf States, highlighting the importance of customer-centric innovation [11][14] - It categorizes features into 'MUSTS', 'DELIGHTERS', and 'DIFFERENTIATORS', indicating their frequency and significance in the market [45][46] Digital Banking Landscape - The Gulf States' digital banking landscape reflects a blend of traditional Islamic values and modern digital solutions, with a focus on core retail banking products [26][27] - There is a notable presence of Islamic finance, influencing how banks operate and design their digital offerings [28] Customer Experience - Customer journeys in the Gulf States are influenced by various factors, including age and residency, leading to a complex landscape for product teams [29] - The report highlights the wide use of rewards and loyalty programs among retail banks, enhancing customer engagement [30] Innovation and Strategy - Financial institutions are encouraged to evaluate competition and develop tailored roadmaps for essential features that resonate with customers [14][15] - The report underscores the need for banks to balance operational efficiency with innovative, localized features to meet economic pressures [11] Future Outlook - The Gulf States are at a pivotal juncture where digital banking is not only about technology but also about cultural resonance, providing opportunities for banks to innovate while respecting local traditions [31]

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - Ghana's economic growth has been significantly impacted by debt accumulation, making it vulnerable to global shocks [28] - The need for stronger domestic revenue mobilization is emphasized to create fiscal space [51] - Public expenditure has been growing rapidly, burdened by high interest payments on debt, leading to inefficiencies in spending [64] - The report highlights the importance of improving public financial management (PFM) to enhance fiscal policy effectiveness [77] Summary by Sections Overview - Ghana's GDP growth has been strong but unsustainable, driven by oil production and expansionary fiscal policies, leading to increased debt levels [29][36] - The country has faced setbacks in poverty reduction due to recent global crises, necessitating a focus on macroeconomic stability and public investment [28] Domestic Revenue Mobilization - Ghana's revenue performance has declined, with tax collection falling from 15.7% of GDP in 2017 to 13% in 2021, significantly below its estimated tax capacity [51] - The report discusses the need for reforms in personal income taxes and VAT to improve revenue collection [51][56] Public Expenditure - Government spending has nearly doubled from 2010 to 2022, with a significant portion allocated to public sector wages and interest payments, limiting fiscal flexibility [64] - High interest payments have crowded out capital expenditures, leading to insufficient public investment in infrastructure [68] Public Financial Management - Despite some progress in PFM reforms, challenges remain, including delays in budget preparation and ineffective expenditure controls [77] - The report identifies weaknesses in cash management and commitment controls, contributing to significant arrears accumulation [84]

Investment Rating - The report does not explicitly provide an investment rating for the irrigation and drainage industry Core Insights - Innovation and modernization (I&M) in irrigation and drainage (I&D) are essential for enhancing agricultural productivity and sustainability in response to increasing global food demand and environmental challenges [46][47][50] - The report emphasizes the need for reliable, flexible, and equitable water service delivery to farmers, which is critical for optimizing crop production and improving farmer incomes [92][93][101] Summary by Sections Introduction - The guide outlines the importance of I&D for crop development, highlighting the roles of irrigation in supplying moisture and drainage in maintaining soil health [32][34] - It discusses the dynamic nature of I&D systems, which require interaction with farmers and adaptability to changing conditions [42][43] Chapter One: Defining the Nature and Purpose of I&M in I&D - I&M is described as a systematic, solutions-driven process that incorporates technological and management improvements tailored to local contexts [85] - The objectives of I&M include increasing water use efficiency, optimizing crop production, and ensuring sustainable agricultural practices [90][92] Chapter Two: The 'Why' of I&M in I&D - The chapter identifies key problems in current I&D systems, such as inequitable and unreliable water delivery, which negatively impact agricultural productivity [98][99] - It outlines the goals of I&M, including improving water service delivery, increasing yields, conserving resources, and enhancing livelihoods [101][103] Chapter Three: The 'What' of I&M in I&D - This section provides an overview of various I&M solutions available to improve irrigation systems, emphasizing the need for tailored approaches based on specific contexts [77] - It highlights the importance of integrating technical interventions with agronomic practices to achieve better outcomes [105] Chapter Four: The 'How' of I&M in I&D - The chapter discusses practical steps for implementing I&M at different stakeholder levels, including farmers, irrigation managers, and policymakers [78][79] - It emphasizes the need for a supportive enabling environment and the role of government in facilitating farmer-led innovations [68][79]