JPMorgan-China_Equity_Strategy_This_relief_rally_has_more_to_go-113072552_21页_1mb

Wendy Liu Global Markets Strategy

Key Points

1. Sector Performance

   • Outperforming Sectors: Tech/NEV/AI Supply Chain, Financials, Electrical Equipment. Driven by end-market recovery in consumer electronics, NEV upgrades, AI demand surge.
   • Underperforming Sectors: Real Estate/Industrial Materials, Solar Ecosystem, Pharmaceutical. Hindered by weak demand, overcapacity, and inventory write-downs.
   • Notable Changes: Semiconductors under AK-shaped recovery due to AI spending vs. Traditional semis facing inventory risks.

2. Market Indicators

   • MXCN: 3.0% gain in week-2025; IT (+5.5%), Financials (+4.0%) led vs. Utilities (-1.4%).
   • CSI-300 might record ~6% EPS growth over 2024/25.
   • 2024 EPS Revisions: IT, Materials showed upside; Financials, Consumer Staples revised downward.
   • Valuation: MXCN trading below MSCI EM surrounding US elections.

3. Flow & ETF Activity

   • Net Inflows: Offshore ETFs surged HK$2.7bn (weekly); domestic funds slowed to HK$0.7bn.
   • Activity Trend: Outflows across Consumer Discretionary, IT sectors; top net buys: Baidu, CCB-H, Weigao Group; top net sells: Tencent, Meituan.

4. 2025 Recommendations

   • Top Picks: NetEase, MGM China, Futu.
   • Sector Weights: Communications Services (+22.7% year-ahead wgt); Technology, Industrials, Materials.
   • Funding/ETF: A-share ETFs favored National Team Supporting A-shares (Huijin) and Swap facility for Blue Tops. Avg P/E: >15x multiple may see rebounds.

Actionable Insights

• Monitor Tech/Financials: EPS growth drivers (IT, Auto) pegged to AI/Auto cycle; RMS P/E could push MXCN over Asia/EM indices.
• Avoid Real Estate/Petrochemicals: Impaired inventory + slower demand create settlements risks. Solar has 2nd-6th quarter catalysts.
• Top Stocks: Futu (97 USD, at 160 PT) via brokerage; NetEase post-Q4 game lift; MGM China's valuation bite price below peer.