28 February 2025 Global bond flows compass Fixed Income Favouring Asia local debt Global Chart of the week: Weak demand for NTN-F in January -6000 -4000 -2000 0 2000 4000 6000 8000 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Dec-24 Jan-25 Foreign flows (USDm) LFT LTN NTN-F Source: Brazil government website, Bloomberg, HSBC Figure 1. Monthly trends in offshore bond flows of EM sovereign debt Note: *For period, see Table 1. Source: Central bank websites, HSBC Soumya Mohanty, C ...

J P M O R G A N North America Equity Research 28 February 2025 Duolingo Max & AI Product Cycle Supports Potential 2025 Bookings Growth Upside; Modeling 2H DAU Growth Re-Accel; Adj. EBITDA Margin Pick-Up in 2H; Reiterate OW & $410 ▲Price Target (Dec-25):$410.00 Prior (Dec-25):$400.00 DUOL shares traded down -7% post-close as the 2025 Bookings & Adj. EBITDA guide were modestly below high investor expectations. However, we're encouraged by DUOL's AI product cycle led by Max, which comprises ~5% of paid subscri ...

February 28, 2025 03:10 PM GMT China Materials | Asia Pacific Weekly Monitor: Demand Seasonally Recovers Rebar consumption has improved for two weeks in a row. Base metals: Shanghai copper prices were down 0.8% WoW, while inventories decreased 0.4% WoW. Shanghai aluminum prices were down 1.1% WoW, while inventories were down 5.5% WoW. Key news of the week: Reuters – Trump orders new tariff probe into US copper imports under Section 232. Battery metals: Domestic industrial-grade lithium hydroxide and battery ...

Hong Kong 28 February 2025 Daily dose of HK & mainland China Real Estate Research Focus and Views on the News HK & mainland China Highlights of the day Head of Asia Real Estate and HK Equity Research The Hongkong and Shanghai Banking Corporation Limited michellekwok@hsbc.com.hk +852 2996 6918 Raymond Liu*, CFA Analyst, Asia Real Estate and Conglomerates The Hongkong and Shanghai Banking Corporation Limited raymond.w.m.liu@hsbc.com.hk +852 2996 6743 Michelle Kwok* Real Estate Mainland China Research focus Su ...

February 28, 2025 10:51 AM GMT China Materials | Asia Pacific Demand Tracker – February 28 Per 100NJZ, the work resumption rate of sampled construction projects was 64.6% in the fourth week after the holiday, 10.8% lower YoY. Production/Sales of industrial goods: Per CISA, in mid-Feb, average daily output of major steel mills was 2.151mnt, up 0.8% vs. early-Feb. Hubei Huangshi promotes off- peak cement production, and urged production based on approved capacity. Fubao reported that weekly production of lith ...

Summary of Key Points from the Conference Call Industry Overview - The conference call focused on the Chinese economy and market outlook, particularly in the context of the upcoming "Two Sessions" in March 2025. Onshore clients from major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen were consulted, including mutual funds, private equity funds, and asset managers from banks and insurance companies [1][2]. Core Insights 1. **Improved Sentiment on China’s Macro Outlook** Onshore clients have become slightly more optimistic about China's macroeconomic and market outlook due to recent developments in AI and the property sector, including home sales and prices in large cities [2][6]. 2. **Concerns About US Growth** There is heightened concern among clients regarding the US growth outlook, particularly due to the implications of Trump’s tariff and immigration policies, as well as issues surrounding US debt sustainability [7][9]. 3. **Low Expectations for "Two Sessions"** Onshore clients expressed low expectations for significant announcements during the upcoming "Two Sessions," particularly regarding fiscal measures and government bond issuance quotas [8][11]. 4. **Uncertainties in US-China Relations** The recent signing of the National Security Presidential Memorandum and the announcement of additional tariffs on Chinese goods have contributed to uncertainties in US-China relations, with clients expecting a more restrained response from China compared to previous years [9][12]. 5. **Monetary Policy Outlook** Clients believe that China's monetary policy has effectively tightened since the beginning of the year, despite a shift in the PBOC's stance to "moderately loose." There is a consensus that further liquidity injections will be necessary [13]. 6. **PPI Deflation Concerns** Onshore clients have lower expectations for PPI inflation, with many anticipating it may not turn positive until 2026 or later, citing overcapacity issues and the prolonged downturn in the property sector [14]. 7. **Differences Between Onshore and Offshore Perspectives** There are notable differences in how onshore and offshore investors view the Chinese economy, with onshore investors focusing more on PPI deflation and industrial policy, while offshore investors are more concerned with signals from the "Two Sessions" [15]. Additional Important Points - **Property Sector Recovery** Clients noted some recovery in the property sector, particularly in large cities, but acknowledged that lower-tier cities may continue to face challenges [6][7]. - **Government Bond Issuance Expectations** Market expectations for total government bond net issuance are in the range of RMB12-13 trillion, with some clients flagging risks of a smaller issuance quota than previously expected [11]. - **AI Investment Incentives** Local governments and corporates are increasingly incentivized to boost AI-related investments, reflecting a recovery in economic "animal spirits" [6]. - **RMB Exchange Rate Stability** Clients do not expect significant depreciation of the RMB against the USD, contrasting with sentiments from late last year [13]. This summary encapsulates the key insights and concerns raised during the conference call, providing a comprehensive overview of the current sentiment among onshore clients regarding the Chinese economy and its interaction with global factors.

February 28, 2025 04:53 AM GMT Cosmetics & Personal Care Products | Japan Tracking Changes in Business Strategies at Daily Goods Companies: Japan HPC & Beauty Trends (Week Feb 28) A look at the history of the 2 daily goods firms to understand how they came to deploy their current business strategies. Rising interest in Lion: This week we received many questions regarding Lion, due to the stock's movement, such as its focus on oral care in the current portfolio. Here we look at the history of Lion and Kao to ...

28 February 2025 Equity Research Report China Power T&D Equipment Equities Concerns on price competition overdone The share prices of the five power equipment stocks we cover (Pinggao, Xuji, Nari, Huaming, Sieyuan) have dropped 1-18% YTD (vs CSI 300 index up 1%). We believe the correction is likely due to concerns on price cuts in the grid sector. The State Grid issued a notice (9 January 2025) to expand the scope of joint procurement in second-level regions. While the new policy could invite price cuts to ...

February 28, 2025 02:46 PM GMT China Property | Asia Pacific Major Developers' February Sales Stayed Decent, but Sustainability Remains Key CRIC preliminary sales data show contracted sales of 30 major Industry View In-Line developers we track dropping 16% y-y on average in February from a low base. We expect their sales growth to weaken in coming months owing to reduced landbank, reactive policy rollout, and higher base. Major developers posted positive sales growth in February, as we expected: The top 50 ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the retail sales performance in China, highlighting the divergent trends across different city tiers [2][3]. Core Insights 1. **Weak Consumption as a Structural Issue** - Weak consumption is identified as a major structural problem in China, contributing to a supply-demand imbalance and prolonged deflation pressure. From 2022 to 2024, consumption contributed an average of 2.8 percentage points to GDP growth per annum, significantly lower than the 4.2 percentage points from 2016 to 2019 [3][12]. 2. **Retail Sales Growth Disparity** - Cumulative retail sales growth from 2022 to 2024 was only 3.5% in tier-1 cities, compared to 8.6% in tier-2 cities and 11.2% in lower-tier cities [4][5]. This indicates a significant divergence in retail performance across city tiers. 3. **City-Level Performance Variability** - Among 168 cities analyzed, 8 cities reported over 20% cumulative growth, while 5 cities experienced a contraction. Notably, Beijing and Shanghai reported declines of -5.4% and -0.8%, respectively [6][8]. 4. **Household Income as a Key Driver** - A strong positive correlation exists between household income growth and retail sales growth, with an R-squared value of 0.32. This suggests that household income is a critical factor influencing consumption [9][12]. 5. **Policy Implications for Consumption Boost** - The report discusses the need for policies that boost household income and consumption. Direct fiscal transfers, such as cash handouts or consumption vouchers, are seen as temporary solutions. A more sustainable approach would involve broadening employment and income bases, particularly in the service sector [12][28]. 6. **Housing Market Dynamics** - The housing market's impact on consumption is multifaceted, involving both wealth effects and debt service burdens. The report notes that the decline in home prices has negatively affected consumption, particularly in tier-1 cities where home prices remain high relative to income [14][29]. 7. **Debt Service Burden and Affordability** - The average home price to income ratio was 17.0 in tier-1 cities, compared to 8.6 in tier-2 and 6.9 in tier-3 cities. High ratios in tier-1 cities correlate with weaker retail sales growth due to increased mortgage burdens [23][24]. 8. **Government Actions and Local Discretion** - Recent government actions to support consumption, such as trade-in subsidies, are noted. However, the effectiveness of these measures may vary across cities, necessitating local discretion to maximize impact [30][27]. Additional Important Insights - The report emphasizes the importance of addressing the social safety net and public services to reshape household expectations and reduce precautionary savings [13][28]. - The ongoing debate regarding effective policy measures to stimulate consumption highlights the complexity of the economic landscape in China [12][27]. This summary encapsulates the key findings and insights from the conference call, providing a comprehensive overview of the current state of retail sales in China and the factors influencing consumption trends.