China’s semiconductor self-sufficiency and initiation of coverage on CXMT lead the agenda, with sharply divergent global corporate, macro, and asset views

Overview

This is a cross-industry, cross-asset research summary centered on China’s semiconductor supply-chain self-sufficiency and the initiation of coverage on CXMT, while also covering Jackson Hole, Asian technology equipment, robotics, corporate earnings, index rebalancing, equity strategy, and global FX and rates views. The overall conclusion is that AI investment and supply-chain localization continue to provide structural growth opportunities, but Chinese domestic demand, near-term earnings at certain companies, and US long-end interest rates remain under pressure.

Core views

China semiconductors are the central topic of this report. In the first edition of its CHIPS research in 2023, Goldman Sachs examined the conditions, capital, and success factors required for China to build an independent semiconductor supply chain while facing constraints in talent, equipment, and advanced-process chips. Three years later, the fourth edition concludes that gaps across semiconductor production equipment, wafer foundry, AI chips, memory, and EDA are continuing to close. Goldman Sachs raised its forecast for China’s 2030 semiconductor capex by 79% to US$82 billion, but emphasized that lithography remains the key bottleneck in narrowing the value gap between supply and demand. Even though R&D and capital investment have increased substantially, the gap with global leaders remains significant, and Chinese companies will require more capital to enter global markets. The report initiated coverage of CXMT, China’s leading DRAM company, with a Buy rating and a Rmb129 target price, corresponding to 24x 2027E P/E; by comparison, average EPS growth in 2027-2028 is expected to be 77%. The growth thesis is driven by increased AI spending and customer efforts to diversify supply sources. Goldman Sachs expects CXMT’s capacity to more than double from 2026 to 665,000 wafers per month by 2030 and expects its supply to cover 50% of China’s DRAM demand by 2028. Beyond capacity expansion, upgrading the product mix toward HBM is viewed as an additional opportunity to participate in incremental demand from China’s AI market. On the macro front, the report views the Jackson Hole symposium as an important opportunity to observe policymakers before interest-rate decision-making resumes in the autumn. Fed Chair Warsh will deliver his first keynote speech since becoming Chair on Friday morning, but it remains uncertain whether the content will focus on the long-term policy framework or provide a more traditional preview of near-term action. Goldman Sachs notes that speeches by recent Fed leaders at Jackson Hole have triggered substantial FX volatility, but a Chair’s inaugural speech does not necessarily result in greater volatility. In addition to the formal agenda, the report pays particular attention to sideline television interviews, as these may provide more near-term policy information given the Chair’s recent reluctance to offer explicit forward guidance. Regarding Samsung Electronics, the company announced its FY2026 shareholder-return plan after the August 21 close, with the remaining return pool expected to be W90 trillion-W110 trillion, or approximately W100 trillion. Based on updated cash-flow, dividend, and share repurchase and cancellation assumptions, Goldman Sachs raised its 2026-2028 EPS forecasts by 1%-11% and increased its ROE forecasts for the same period to 53%, 52%, and 43%. The stock trades at 1.7x 2027E P/B and 1.2x 2028E P/B, against expected ROE of 40%-50%. The report believes larger and more stable shareholder returns should help drive valuation-multiple expansion and therefore maintains its Conviction Buy rating. Research on South Korea’s wafer equipment, substrates, chip testing, and HBM supply chain also reinforced Goldman Sachs’ positive views on Samsung Electronics, SK Hynix, and SEMCO. The Japanese semiconductor equipment research significantly raised forecasts for the global wafer fab equipment market to US$150.3 billion in 2026 and US$217.5 billion in 2027. The upgrades reflect a sharp increase in order backlogs, stronger capex intentions, AI-driven demand across DRAM, logic, and foundry, and continued rapid double-digit capex growth in China. In a strong order environment, production capacity, delivery lead times, and pricing power will increasingly determine the direction of earnings. Based on technological advantages and margin-expansion potential, Goldman Sachs reiterated Buy ratings on Lasertec, Disco, Tokyo Electron, and Ebara. For the Chinese economy, Goldman Sachs estimates that official real GDP growth in the first three quarters of the year was approximately 4% yoy after July activity data again indicated weak demand. The report believes policy support over the past several years has remained insufficient relative to the scale of the shocks affecting the economy, while the private sector continues to face financial pressure. Measures such as accelerating government bond issuance and supporting major industries may help achieve the annual growth target, but these policies are mostly supply-side oriented and are unlikely to create sustained momentum. Without stronger demand-side stimulus and fundamental reforms, cyclical weakness may evolve into structural stagnation. Following the 2026 World Robot Conference, the humanoid robotics sector shifted from technology demonstrations toward product-market fit, quantifiable returns on investment, and early commercialization. Logistics sorting has emerged as a leading early application, with the goal of achieving small-batch volume ramp-up by the end of 2026 and larger-scale production in 2027. As no breakthrough in a new AI-model paradigm was observed, the near-term focus remains on continuous improvement, scientific data collection, and cost reduction through economies of scale and standardized components. Goldman Sachs maintains Buy ratings on Inovance Technology, the H shares of Sanhua Intelligent Controls, and Shuanghuan Driveline; Neutral ratings on Leaderdrive, the A shares of Sanhua Intelligent Controls, Luster, and Best Precision; and a Sell rating on Moons’ Electric. Among technology companies, NetEase management research indicates that the company is reducing its overseas studios and instead pursuing global distribution of large games developed in China, with the overseas revenue contribution expected to increase gradually. There is limited room for further gross-margin expansion following recent optimization, but productivity gains from AI tools are expected to keep operating expenses stable. Goldman Sachs maintains its Buy rating and 12-month target price of US$168 or HK$263. KE Holdings’ second-quarter adjusted earnings exceeded expectations, with existing-home transaction volume up 25% yoy and contribution margins improving in both core housing transactions and new businesses. Goldman Sachs lowered its 2026-2028 revenue forecasts by 3%-12% due to the new businesses, but raised its EPS forecasts by 12%, 7%, and 4% based on better-than-expected gross margins and cost control, and increased its target price to US$24 or HK$63. Demand for Japanese IT services remains strong. Goldman Sachs raised its FY2028 and FY2029 operating profit forecasts for Fujitsu by 1%-2%, believing that expanding domestic IT-service demand and improving margins can offset near-term pressure on hardware solutions from rising memory prices. As costs are gradually passed downstream, this negative impact should narrow, and the target price was raised to ¥4,380. Following strong first-quarter results, NEC’s FY2027-FY2029 operating profit forecasts were increased by 8%-14%, and its 12-month target price was raised from ¥5,190 to ¥6,000. Domestic IT modernization demand, consolidation of the US CSG business, and demand for aerospace, defense, and submarine cables provide growth support, while the impact of rising memory prices is expected to be smaller than the company itself assumes. Industrial, financial, and consumer companies show substantial divergence. Zijin Mining’s recurring net profit for the first half of 2026 was Rmb38.8 billion, up 77% yoy and broadly in line with expectations; free cash flow improved significantly to Rmb37.2 billion. Goldman Sachs raised its 2026 earnings forecast by 2% on mark-to-market adjustments and increased its 2028 forecast by 32% based on a higher copper-price assumption of US$13,700 per tonne. Gold and copper output is expected to grow by 5%-12%, while the 12-month target price remains HK$51 or Rmb49. Oriental Yuhong’s overseas sales rose 208% yoy and the retail revenue contribution increased, but weak project-channel demand and higher impairments prompted reductions of 26%, 4%, and 2% in its 2026-2028 net profit forecasts, respectively, and its target price was lowered to Rmb16.2. Subsequent earnings improvement depends on a recovery in Chinese fixed-asset investment that drives a rebound in the project channel. AIA’s first-half Hong Kong sales fell short of expectations due to a high base for mainland Chinese visitor business, but value of new business in the local business grew by 23%, and management believes wealth diversification and healthcare demand continue to support mainland visitor demand. Goldman Sachs lowered its FY2026-FY2028 value-of-new-business forecasts by 2%-3% and reduced its book-value forecasts by 5%-7% due to unrealized losses in the bond portfolio, lowering the target price to HK$96. Ping An’s first-half investment income exceeded expectations, leading Goldman Sachs to raise its FY2026 net profit forecast by 12%. However, new fee regulations caused a marked slowdown in bancassurance sales, the value-of-new-business forecast was lowered slightly, and the target price was reduced to HK$73 or Rmb75. With the 10-year bond yield falling below 1.7% and the net investment yield declining faster than expected, investor attention is expected to shift back toward the core life-insurance business. Kweichow Moutai retains a Buy rating and Rmb1,626 target price. Management is placing greater emphasis on healthy sell-through, price stability, and lean channel inventory than on short-term reported growth. Goldman Sachs believes second-quarter weakness primarily reflected proactive product and channel adjustments rather than a sharp deterioration in retail demand. The iMoutai platform contributed 43.6% of group revenue in the first half of 2026 and expanded engagement among younger consumers. Li Ning, meanwhile, lowered its full-year 2026 revenue-growth guidance to the low single digits amid a lack of meaningful recovery in consumer demand, lower offline traffic, and wider discounts. Goldman Sachs reduced its 2026-2028 sales forecasts by 2%-4% and net profit forecasts by 13%-15%, lowering the target price to HK$19.50, but it continues to recognize the company’s long-term direction of prioritizing operating quality over scale and strengthening its brand and product innovation. AAC Technologies was downgraded from Buy to Neutral following weaker-than-expected results in the first half of 2026, and its 12-month target price was reduced to HK$50. Slow smartphone-market growth and high memory costs prompted Goldman Sachs to lower its 2026-2028 net profit forecasts by 2%-6%. New product launches and volume growth in the AI data-center cooling business may support a second-half recovery, but the share price is already close to the target valuation of 17x 2027E P/E, and the report believes the positive factors are largely priced in. Regarding events and strategy, Kakao plans to conduct a pro rata spin-off in January 2027 into KakaoX, which will hold investments and affiliates, and KakaoAI, which will house the core platform and AI businesses. Goldman Sachs believes the transaction itself does not create operating value because the existing sum-of-the-parts valuation already separates the core businesses from non-core assets and applies a 30% discount to the latter. Continued rerating requires verifiable AI-commercialization milestones and a credible framework for realizing KakaoX’s net asset value. Management’s 2030 AI-revenue target is W1 trillion, significantly above Goldman Sachs’ estimate of W190 billion. The report maintains its Buy rating and W51,000 target price. The September 2026 rebalancing of the Hang Seng Index series is expected to generate more than US$7.2 billion in two-way passive flows. Technology hardware and semiconductors will receive the largest passive inflows, while banks will face the largest outflows. Hua Hong Semiconductor and Weichai Power will be added to the Hang Seng Index, while Shanghai Enflame Technology will replace Tongcheng Travel in the Hang Seng TECH Index. Trip.com, Lenovo, Hua Hong, Weichai, Tencent, and SMIC are expected to receive the largest passive net inflows. Halfway through Australia’s reporting season, 44% of ASX 200 companies had earnings above consensus expectations, but FY2027 EPS forecasts had already been cut by approximately 2%, about twice the pace of reductions during the same period in previous years. Large share-price moves on reporting days were positive overall. Small caps, value, healthcare, and non-bank financials continued to outperform, while the retail sector produced more earnings misses. US strategy research analyzed US$10 trillion of equity holdings at the start of the third quarter of 2026. Hedge funds remained more exposed to the AI trade than mutual funds, but both adjusted their positions in the previous quarter, with mutual funds buying certain semiconductor stocks and hedge funds selling. The two institution types simultaneously overweighted financials for only the third quarter in the historical dataset. Six stocks jointly favored by both groups span aerospace, financials, and healthcare, and their rolling portfolio returned 29% year to date. In FX, Goldman Sachs believes that US Treasury supply-demand imbalances, Federal Open Market Committee communication favoring an unchanged policy rate, and more active use of policy tools by the US Treasury will jointly weaken the dollar. The 3-month, 6-month, and 12-month USD/MXN forecasts were revised to 16.75, 17.00, and 17.25, respectively; USD/TRY forecasts were set at 51, 53, and 59; and USD/KRW forecasts were revised to 1,390, 1,370, and 1,350, indicating continued won appreciation but a flatter path. On rates, the US Treasury’s doubling of buybacks for 10- to 30-year Treasuries has not resolved the macroeconomic roots of long-end volatility. As long as cyclical resilience and policy uncertainty persist, attempts to reduce volatility through supply adjustments may transfer pressure to intermediate maturities or the dollar. Clarification of the Fed’s reaction function at Jackson Hole could temporarily relieve pressure, but the report still sees several near-term paths for underperformance in the intermediate segment of the US curve and favors cross-market steepening trades versus Europe. Expectations surrounding the UK autumn budget may also keep the recent repricing of gilt term premiums persistent.

Analysis framework

The report first analyzes China’s semiconductor self-sufficiency and CXMT through supply-chain gaps, capex, technological bottlenecks, capacity, and product mix, then combines forward P/E with earnings growth to form its initiation-of-coverage conclusion. It subsequently explains how changes transmit to earnings, valuations, and market performance in the sequence of macro events, industry supply and demand, corporate results and forecast revisions, valuations, index-related passive flows, institutional holdings, and FX and yield curves.

Methodology notes

• Industry/Sector Analysis FrameworkUpstream-Midstream-Downstream Industry-Chain Transmission

  Semiconductor supply-chain gap analysis

  The report examines localization progress in semiconductor equipment, wafer foundry, AI chips, memory, and EDA, and links lithography bottlenecks, capital investment, and end-market AI demand to assess progress toward China’s semiconductor self-sufficiency and the areas where gaps remain.

• Industry/Sector Analysis FrameworkSupply-demand framework

  Matching capacity, orders, and demand

  The outlooks for CXMT and global wafer fab equipment both assess the direction of revenue and profits based on the relationships among demand growth, capacity expansion, order backlogs, delivery lead times, and pricing power.

• Valuation MethodPE/PEG valuation

  Comparison of forward P/E and earnings growth

  CXMT’s target price corresponds to 24x 2027E P/E and is compared with average EPS growth of 77% in 2027-2028; AAC Technologies is assessed at 17x 2027E P/E, indicating that the benefits of a recovery are largely priced in.

• Valuation MethodPB valuation

  Matching P/B with ROE

  The report combines Samsung Electronics’ 1.7x 2027E and 1.2x 2028E P/B multiples with ROE of 40%-50% to assess whether stable shareholder returns can drive valuation-multiple expansion.

• Valuation MethodSOTP Valuation

  Segment valuation of Kakao’s core and non-core assets

  Goldman Sachs already values Kakao’s core businesses and non-core holdings separately and applies a 30% discount to the latter, so it believes a spin-off alone will not automatically create operating value.

• Corporate Fundamentals and Financial Framework

  Earnings forecast revisions and mark-to-market adjustments

  The report adjusts company revenue, profit, EPS, and target-price forecasts based on results, gross margins, expenses, cash flow, commodity prices, bond-portfolio gains and losses, and business guidance.

• Event Strategy and Behavioral FinanceEvent-driven analysis

  Analysis of index rebalancing and corporate spin-off events

  The report estimates passive flows based on changes in index constituents and assesses whether Kakao’s spin-off can catalyze value realization.

• Event Strategy and Behavioral FinanceFund Flow/Positioning Analysis

  Institutional holdings and passive-flow analysis

  The report analyzes US$10 trillion of hedge-fund and mutual-fund holdings and combines this with passive inflows and outflows from Hang Seng Index rebalancing to assess the potential impact of capital flows on different sectors and stocks.

• Fixed Income and Credit AnalysisYield curve analysis

  US Treasury curve and cross-market steepening

  The report examines transmission among long-end buybacks, intermediate-maturity rates, term premiums, and policy uncertainty, and uses this to form a view favoring US curve steepening relative to Europe.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CXMT

  A key beneficiary of China’s DRAM self-sufficiency and AI demand, initiated at Buy.

  Strengths

  Capacity is expected to increase to 665,000 wafers per month by 2030, with the product mix upgrading toward HBM.

  Weaknesses

  China’s semiconductor ecosystem still faces gaps in lithography, R&D, and capital investment.

  Comparison

  The target price corresponds to 24x 2027E P/E, compared with average EPS growth of 77% in 2027-2028.

  Risks

  Bottlenecks in critical equipment within China’s supply chain and additional capital requirements.

• Samsung Electronics (005930.KS)

  Large-scale, sustained shareholder returns are expected to drive valuation-multiple expansion.

  Strengths

  The remaining 2026 shareholder-return pool is expected to be W90 trillion-W110 trillion, with high forecast ROE.

  Comparison

  Trades at 1.7x 2027E and 1.2x 2028E P/B, with expected ROE of 40%-50%.

• Lasertec, Disco, Tokyo Electron, Ebara

  Beneficiaries of global wafer fab equipment demand and AI capex growth, all reiterated at Buy.

  Strengths

  Technological advantages and margin-expansion potential.

  Weaknesses

  Earnings delivery is increasingly dependent on production capacity and delivery lead times.

  Comparison

  Presented as a key Buy basket in Japan’s semiconductor equipment sector.

• Inovance Technology, Sanhua Intelligent Controls H shares, Shuanghuan Driveline

  Beneficiaries of humanoid robotics moving from demonstrations toward commercialization, with Buy ratings maintained.

  Strengths

  Poised to benefit from increasing logistics-sorting volumes, economies of scale, and component standardization.

  Weaknesses

  The industry has not yet seen a breakthrough in a new AI-model paradigm.

  Comparison

  The views are more positive than the Neutral ratings on Leaderdrive, Sanhua Intelligent Controls A shares, Luster, and Best Precision, and the Sell rating on Moons’ Electric.

  Risks

  The scale of commercialization and pace of cost reduction remain to be validated.

• NetEase

  A strategy of developing large games in China and distributing them globally supports long-term overseas expansion.

  Strengths

  Long-term IP management, globalization goals, and productivity improvements from AI tools.

  Weaknesses

  Limited room for further gross-margin expansion following recent optimization.

• KE Holdings

  Second-quarter earnings above expectations validate the thesis of improving agent and store efficiency.

  Strengths

  Existing-home transaction volume grew 25% yoy, with broad improvement in contribution margins.

  Weaknesses

  Revenue forecasts for new businesses were lowered.

  Comparison

  Existing-home transaction performance outpaced the overall market.

• Fujitsu

  Benefits from Japanese domestic IT-service demand and margin improvement.

  Strengths

  FY2028 and FY2029 operating profit forecasts were raised by 1%-2%.

  Weaknesses

  Rising memory prices may cause near-term hardware solutions to fall short of guidance.

  Risks

  Pace of cost pass-through.

• NEC

  Domestic IT modernization and demand for defense and submarine cables support earnings upgrades.

  Strengths

  FY2027-FY2029 operating profit forecasts were raised by 8%-14%, with consolidation of the US CSG business providing incremental growth.

  Weaknesses

  Still affected by rising memory prices.

  Comparison

  Goldman Sachs believes the negative impact of memory costs will be smaller than the company itself assumes.

• Zijin Mining (2899.HK)

  Rising commodity prices and growth in gold and copper output support earnings and cash flow.

  Strengths

  First-half recurring net profit rose 77% yoy, while free cash flow increased to Rmb37.2 billion.

  Weaknesses

  Earnings forecasts are relatively sensitive to copper-price assumptions.

  Comparison

  Results were broadly in line with Goldman Sachs’ expectations.

  Risks

  Changes in commodity prices.

• Oriental Yuhong

  Retail and overseas businesses support the transformation, but the project channel weighs on near-term earnings.

  Strengths

  Overseas sales grew 208% yoy, and the retail revenue contribution increased.

  Weaknesses

  Weak demand and higher impairment losses led to a 26% reduction in the 2026 net profit forecast.

  Risks

  Recovery in the project channel depends on a rebound in Chinese fixed-asset investment.

• AIA

  Hong Kong sales fell short of expectations in the near term, but mainland visitor and local-business demand are still considered intact.

  Strengths

  Value of new business in the Hong Kong local business grew by 23%.

  Weaknesses

  Hong Kong sales face a high base, and the bond portfolio has unrealized losses.

  Risks

  Regulatory developments and a weaker-than-expected recovery in Hong Kong sales.

• Ping An

  Higher investment income boosts near-term net profit, but attention will return to the core life-insurance business.

  Strengths

  The FY2026 net profit forecast was raised by 12%.

  Weaknesses

  Bancassurance sales slowed, and the net investment yield declined faster than expected.

  Risks

  Low interest rates and asset-quality pressure.

• Kweichow Moutai

  Prioritizes sell-through, price stability, and healthy inventory over short-term reported growth.

  Strengths

  Channel inventory remains healthy, and iMoutai contributed 43.6% of first-half revenue.

  Weaknesses

  Second-quarter performance was soft.

  Comparison

  The report believes the weakness was driven more by proactive product and channel adjustments than by a sharp deterioration in retail demand.

• Li Ning (02331.HK)

  The recent consumer environment weighs on earnings, but the report continues to recognize the strategic direction of prioritizing operating quality.

  Strengths

  Brand and product innovation may support a future recovery in market share.

  Weaknesses

  Lack of demand recovery, lower offline traffic, wider discounts, and high marketing investment.

  Risks

  Persistently weak macro consumer demand.

• AAC Technologies

  Downgraded from Buy to Neutral due to weaker-than-expected earnings and a more balanced valuation.

  Strengths

  New devices and the AI data-center cooling business may support a recovery in the second half of 2026.

  Weaknesses

  Slow smartphone-market growth and high memory costs led to 2%-6% reductions in earnings forecasts.

  Comparison

  The share price is already close to the target valuation of 17x 2027E P/E.

  Risks

  A weaker-than-expected second-half recovery.

• Kakao Corp.

  Plans to separate the core platform and AI businesses from investment holdings, but the transaction itself is not viewed as immediately unlocking value.

  Strengths

  The boundaries between core and non-core assets will become clearer.

  Weaknesses

  Management’s AI-revenue target is significantly above Goldman Sachs’ estimate, and the framework for realizing the value of non-core assets remains unclear.

  Comparison

  The existing sum-of-the-parts valuation already applies a 30% discount to non-core holdings.

  Risks

  AI commercialization and net asset value realization may fall short of expectations.

Key data

• China semiconductor capex in 2030US$82bnRaised by 79% from the previous forecast
• CXMT target priceRmb129Initiated with a Buy rating
• CXMT valuation24x 2027E P/ECorresponds to average EPS growth of 77% in 2027-2028
• CXMT capacity in 2030665k wpmMore than double the 2026 level
• CXMT coverage of China’s DRAM demand50%Goldman Sachs expects this level to be reached in 2028
• Samsung Electronics’ remaining 2026 shareholder-return poolW90tn-W110tnApproximately W100 trillion
• Samsung Electronics EPS forecast revisions+1%-11%Covering 2026-2028
• Samsung Electronics ROE forecasts53%/52%/43%For 2026, 2027, and 2028, respectively
• Global wafer fab equipment market forecastsUS$150.3bn/US$217.5bnFor 2026 and 2027, respectively
• Estimated China real GDP growth in the first three quartersApproximately 4% yoyBased on renewed demand weakness indicated by July activity data
• KE Holdings existing-home transaction-volume growth+25% yoySecond quarter of 2026, outperforming the overall market
• KE Holdings EPS forecast revisions+12%/+7%/+4%For 2026-2028, respectively
• NEC operating profit forecast revisions+8%-14%Covering FY2027-FY2029
• NEC target price¥6,000Raised from ¥5,190
• Zijin Mining first-half recurring net profitRmb38.8bnUp 77% yoy
• Zijin Mining first-half free cash flowRmb37.2bnA significant improvement from the previous level
• Zijin Mining copper-price assumptionUS$13,700/tDriving a 32% increase in the 2028 earnings forecast
• Oriental Yuhong overseas sales growth+208% yoyProject-channel demand remains weak
• AIA Hong Kong local-business VONB growth+23%First half of 2026
• Ping An FY2026 net profit forecast revision+12%Reflecting better-than-expected first-half investment income
• China 10-year bond yieldBelow 1.7%Putting pressure on Ping An’s net investment yield
• iMoutai revenue contribution43.6%Share of group revenue in the first half of 2026
• Li Ning 2026 revenue-growth guidanceLow single digitsManagement’s lowered full-year guidance
• Li Ning net profit forecast revisions-13% to -15%Covering 2026-2028
• AAC Technologies target valuation17x 2027E P/EThe share price is close to the target valuation, and the rating was downgraded to Neutral
• Kakao management’s 2030 AI-revenue targetW1trnGoldman Sachs estimates W190bn
• Two-way passive flows from Hang Seng Index rebalancingMore than US$7.2bnExpected during the September 2026 rebalancing
• Proportion of ASX 200 companies exceeding earnings expectations44%Halfway through Australia’s reporting season
• Reduction in Australia FY2027 EPS forecastsApproximately 2%About twice the pace of reductions during the same period in previous years
• Scale of US institutional holdings analyzedUS$10tnEquity holdings at the start of the third quarter of 2026
• Return of jointly favored US equity portfolio29% YTDRolling portfolio of six stocks jointly favored by institutions
• USD/MXN forecasts16.75/17.00/17.25For 3 months, 6 months, and 12 months, respectively
• USD/TRY forecasts51/53/59For 3 months, 6 months, and 12 months, respectively
• USD/KRW forecasts1390/1370/1350For 3 months, 6 months, and 12 months, respectively

Impact & implications

The report believes AI investment and supply-chain localization are expanding demand opportunities for memory, wafer fab equipment, and related technology companies, but gaps in lithography, R&D, and capital continue to constrain full semiconductor self-sufficiency in China. Corporate earnings and valuations are becoming increasingly divergent: companies with strong orders, technology, cash flow, or stable shareholder returns receive support, while those facing weak demand, rising costs, or valuations that already reflect recovery face pressure on forecasts and ratings. At the macro level, insufficient demand in China and volatility in US long-end interest rates remain important constraints on cross-asset pricing.

Risks

• Lithography remains the key bottleneck in narrowing the value gap between supply and demand in China’s semiconductor supply chain, while gaps in R&D and capex relative to global leaders remain substantial.
• Insufficient demand-side stimulus in China may cause cyclical weakness to evolve into structural stagnation.
• Humanoid robot commercialization still requires validation of product-market fit, returns on investment, mass production, and cost-reduction progress.
• Rising memory prices may suppress near-term profits at Fujitsu, NEC, and other hardware companies.
• Recovery in Oriental Yuhong’s project channel depends on improvements in Chinese fixed-asset investment and domestic demand.
• Low interest rates, bond-portfolio losses, and slower bancassurance sales are creating pressure on operating metrics at AIA and Ping An, respectively.
• Li Ning faces near-term pressure from weak consumer demand, lower offline traffic, wider discounts, and high marketing investment.
• AAC Technologies faces risks from sluggish smartphone demand, high memory costs, and an expected recovery that is already priced in.
• Without verifiable AI-commercialization milestones and a mechanism for realizing net asset value, Kakao’s spin-off may fail to produce a sustained rerating.
• The macroeconomic roots of US long-end rate volatility remain unresolved, and supply adjustments may transfer pressure to intermediate maturities or the dollar.

What to watch

• Watch whether Fed Chair Warsh’s inaugural keynote speech and sideline television interviews at Jackson Hole provide clues about the policy reaction function and near-term actions.
• Track whether China introduces stronger demand-side stimulus and fundamental reforms, and whether the annual growth target can be achieved.
• Track CXMT’s capacity expansion toward 665,000 wafers per month, progress toward covering 50% of China’s DRAM demand by 2028, and HBM product upgrades.
• Observe how global wafer fab equipment orders translate into capacity, delivery lead times, pricing power, and margins.
• Track the commercialization pace of humanoid robot logistics sorting, including small-batch production at the end of 2026 and larger-scale production in 2027.
• Observe whether Samsung Electronics continues to deliver on its remaining W90 trillion-W110 trillion shareholder-return plan.
• Watch whether Chinese fixed-asset investment can drive a recovery in Oriental Yuhong’s project-channel sales.
• Track Kakao’s AI-commercialization milestones and KakaoX’s framework for realizing net asset value.
• Watch the passive flows into technology hardware and semiconductors and out of banks arising from the September 2026 rebalancing of the Hang Seng Index series.
• Track the revised forecast paths for USD/MXN, USD/TRY, and USD/KRW.
• Watch the sustained impact of UK autumn-budget expectations on gilt term premiums.