February 25, 2025 Global | Sustainability & Transition Strategy What's the Market Paying For? February 2025 1) EU ETS has had the strongest performance over 12M (+41%), while Bloomberg Commodity Index (+9%) has been strongest YTD (i.e. 2025). 2) Improvers in our universe over the last 1M include Solar (TAN), Global Alternative Energy (MS700750), and Global Clean Energy (ICLN), up 6.8%, 3.5%, and 4%, respectively, vs the S&P 500. 3) For 4/4/24-2/21/25, the 100 Best Companies to Work For 2024 list has underpe ...

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **Autos & Shared Mobility** sector, particularly regarding **China-US cooperation on electric vehicles (EVs)** [1][8]. Core Insights and Arguments - **Sino-US Relations**: Current relations between the US and China in the auto industry are at a low point, but there is potential for cooperation in EV technology despite ongoing national security concerns [1][2]. - **Market Transformation**: The transition from traditional vehicles to AI-enabled EVs is reshaping the global auto market, supply chains, and regulatory frameworks. Cooperation between US and Chinese automakers is deemed necessary for mutual benefit [2][3]. - **EV Adoption Forecast**: Short-term EV sales are influenced by policies and tariffs, but a significant increase in adoption is expected from 2027 to 2030. EVs are seen as essential for integrating AI technologies into vehicles [3][4]. - **China's Competitive Edge**: China is perceived to have a lead in producing affordable EVs, which may need to be manufactured in the US to meet local market demands. Tariffs may be used to incentivize localization of production [4][5]. - **Capital Efficiency**: Traditional US automakers like GM and Ford are expected to seek more capital-efficient strategies in the EV market, potentially collaborating with Chinese firms to optimize their investments [5][6]. - **IRA Restructuring**: The Inflation Reduction Act (IRA) may require significant changes, particularly regarding the definition of Foreign Entity of Concern (FEOC), to facilitate joint ventures that utilize US-based resources while relying on Chinese technology [6][9]. Additional Important Insights - **Strategic Partnerships**: Increased frequency of strategic announcements, joint ventures, and consolidations between legacy Western and Chinese EV companies is anticipated [11]. - **Stock Ratings**: Companies such as Tesla (TSLA), Rivian (RIVN), and Lucid (LCID) may see continued support, while traditional internal combustion engine (ICE) companies may face stagnation [11][62]. - **Investment Opportunities**: Analysts suggest reconsidering investments in Chinese EV-exposed companies and highlight potential benefits for EV-exposed suppliers [11][62]. This summary encapsulates the critical insights and implications for the auto industry, particularly regarding the evolving dynamics between US and Chinese automakers in the context of electric vehicle technology and market strategies.

Equity Research 24 February 2025 Data Center View Still cautious, but context matters We remain more conservative than most on DC growth – but there are nuances to our perspective. MSFT's own commentary, more so than purported lease cancellations, is reason to be cautious on the AI ecosystem, in our view. Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of ...

ab 24 February 2025 Global Research First Read Apple Inc. $500B in investments in the US over 4 years? Call us a skeptic We think Apple's supply chain and financial model raises doubts around the $500B Apple announced it plans to spend and invest more than $500 billion in the US over the next four years including the hiring of around 20,000 people, of which the vast majority would be focused on R&D, silicon engineering, software development and AI/ML. While the headline figure on the surface is a large numb ...

Summary of Key Points from the Conference Call Industry and Company Overview - The document primarily discusses the implications of macroeconomic factors on equity markets, Treasury yields, and European defense spending strategies, with a focus on the U.S. financial system and European geopolitical dynamics. Core Insights and Arguments Treasury Yields and Equity Performance - The correlation between equity prices and nominal Treasury yields has recently trended negative, indicating a regime shift in market behavior. The critical level for U.S. Treasury 10-year yields (UST 10Y) remains at 5%, but recent trends suggest negative equity reactivity at lower yield levels (~3% UST 10Y) due to a transition from a low yield/low inflation environment to a moderate yield/high inflation context post-COVID [5][16][18]. - Core CPI moderation over the last two years suggests that 5% UST 10Y remains a headwind for equities, but if core CPI were to reflate, negative yield/equity correlation could occur at sub-5% UST 10Y yields [5][16][18]. - The current negative yield/equity correlation presents an opportunity for hedging against recession scenarios, with specific strategies recommended for equity and bond positioning [5][16]. Supplementary Leverage Ratio (SLR) Relief - Anticipated SLR reforms under the Trump administration could reduce the minimum requirement for U.S. Global Systemically Important Banks (GSIBs), potentially creating about $6 trillion in incremental leverage capacity. This could support bank demand for Treasuries and widen swap spreads [5][19][21]. - SLR relief may also enhance dealer repo intermediation capacity but could reduce the value of central clearing, shifting focus towards margin cost reduction [5][20]. European Defense Spending Strategy - Europe's defense spending is currently low and inefficiently allocated, with national competencies leading to fragmented decision-making. A proposed increase in euro area defense spending from approximately 2% to 3.5% of GDP by 2035 could boost GDP by 1.6 percentage points compared to a no-increase scenario [6][24]. - The anticipated increase in defense spending would require careful consideration of public finances and government securities issuance, with expectations for flexible EU fiscal rules and potential redirection of unused EU funds towards defense [6][24]. - A well-designed pan-European solution for defense spending that promotes R&D and resource reallocation is deemed more effective than merely reforming fiscal frameworks for national increases [6][24]. Additional Important Insights - The document highlights the potential for a significant shift in European defense policy due to geopolitical pressures, including Russian aggression and competition from China, necessitating a reevaluation of security and defense strategies [6][24]. - The upcoming German elections are viewed as a critical moment for Europe, with potential implications for fiscal policy and defense spending, which could affect market sentiment and investment flows [6][34][35]. This summary encapsulates the key points discussed in the conference call, focusing on the implications of macroeconomic trends on equity markets, the anticipated regulatory changes affecting banks, and the evolving landscape of European defense spending.

Asia Economics Comment Economics Tariff cascade in action Asia Facts On 20 February 2025, Korea announced provisional anti-dumping tariffs (27.91% to 38.02%) on Chinese steel plates used in shipbuilding and construction, set to take effect after the finance ministry approves. 1 On 21 February 2025, Vietnam announced temporary anti-dumping tariffs (up to 27.83%) on hot-rolled steel products from China for 120 days, from 7 March 2025. 2 According to media reports from 23 February 2025, US trade officials urge ...

Summary of Key Points from the Conference Call on China Property Industry Overview - **Industry**: China Property - **Date**: 24 February 2025 Core Insights and Arguments 1. **Policy Continuity Expected**: The National People's Congress (NPC) meeting starting on 5 March 2025 is anticipated to maintain the policy stance set in September 2024, focusing on property market stabilization, housing delivery, social housing supply, inventory buybacks, and a new real estate development model [1][4][6]. 2. **Local Government Reports**: Multiple local governments' 2025 work reports emphasize similar themes: property market stabilization, housing delivery assurance, social housing supply increase, urban village renovation, and inventory buybacks [2][6]. 3. **Project Completion Progress**: As of the end of 2024, 40% of delayed projects have been completed, which is seen as a positive sign for restoring homebuyer confidence [3][4]. 4. **Rental Market Pressure**: Despite improvements in property sales, rental prices in tier 1-2 cities remain under pressure, indicating ongoing challenges in demand-supply dynamics [2][15][31]. 5. **Destocking Timeline**: The property market destocking is expected to conclude by mid-2026, with key indicators being the stabilization of rental prices and secondary listings [2][15]. Important but Overlooked Content 1. **Social Housing Supply**: The increase in social housing supply in tier 1-2 cities is contributing to the decline in market rentals, highlighting a shift in housing policy focus [3][4]. 2. **Change in Sales Model**: Some local governments are shifting from a presale model to selling completed properties, which may negatively impact developers' return on equity (ROE) in the future [3]. 3. **Government Support for Developers**: The Shenzhen government has provided significant financial support to China Vanke, including a Rmb2.8 billion loan and plans for an additional Rmb4.2 billion loan, indicating a proactive approach to easing liquidity pressures in the sector [12]. 4. **Mixed Signals in Market Recovery**: While primary and secondary inventory destocking shows improvement, the rental market's downward trend suggests that the recovery may not be uniform across all segments [15][30]. Data Highlights - **Inventory Turnover**: Inventory turnover months in tier 1 cities have returned to historical averages, with tier 1 cities at 15 months and tier 2 cities at 20 months [16][22]. - **Secondary Listings**: Secondary housing listings in 50 cities stabilized at approximately 4.1 million units, with a year-over-year improvement from 30% in February 2024 to 8.6% in February 2025 [20][25]. - **Rental Listings Increase**: Rental listings in tier 1 cities rose by 19% since September 2024, while rental prices continue to decline [31][39]. Conclusion The conference call highlighted the ongoing challenges and policy responses in the Chinese property market, with a focus on stabilization efforts and the impact of government measures on housing supply and demand dynamics. The mixed signals in market recovery underscore the complexity of the current environment, necessitating close monitoring of future developments.

ab 24 February 2025 NIC pre-reported revenue, EBITDA & ending cash at their Dec-Q production update (link); the key incremental information from today's result included 1) the $204m impairment for HNI & RNI and 2) dividend of ~A1.5cps with DRP overlay. We refine our modelling assumptions around RKEF output and ENC ramp-up, taking into account the tentative commodity outlook with the market still in oversupply and (non- nickel) LFP batteries continuing to eek share from ternary batteries. This sees us downgr ...

Asia Pacific Equity Research 24 February 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. CATL Overweight "America First Investment Policy" implication Price: Rmb275.55 On February 21, 2025, the White House issued the America First Investment Policy Memo ...

ab 25 February 2025 Global Research First Read Japan Electric Components Sector Feedback from Asian investor trip We visited investors in Hong Kong and Singapore From 17-20 February, we visited investors in Hong Kong and Singapore and had the opportunity to participate in 28 meetings. Cautious views on the electronic components sector predominated throughout 2024. On this visit, there was still a strong sense of caution, but we could detect expectations, albeit slight, regarding a cyclical recovery and edge ...