State-owned banks significantly outperformed joint-stock banks in earnings in 2Q26, with average revenue and profit growing 9% and 6% year-on-year respectively, while joint-stock banks saw revenue rise only 1% and profit fall 9%; the industry's K-shaped divergence continues, and large state-owned banks possess stronger risk resistance under macro pressure.

Retail asset quality pressure is intensifying, with rising NPL ratios for mortgages and credit cards driving average credit costs up 12 basis points year-on-year to 86 basis points, becoming the main factor offsetting core pre-provision profit growth.

Postal Savings Bank of China (PSBC) was upgraded to Overweight due to strong growth in pre-provision operating profit and early signs of stabilization in retail asset quality; the 24 percentage point lag of its H-shares versus peers year-to-date is expected to narrow.

Hua Xia Bank was downgraded to Underweight as profit missed forecasts by 33% due to a sharp rise in impairment charges and an NPL coverage ratio of only about 145%; Industrial Bank was downgraded to Neutral due to a lack of a clear EPS growth path.

The industry's average net interest margin rose slightly by 1 basis points quarter-on-quarter to 1.44% in 2Q26, driven by lower funding costs from time deposit repricing, but is expected to face compression pressure again in 2027 as high-yield bonds mature and are reinvested.

H-share banks have risen 12.4% year-to-date, trading at 0.55x forward price-to-book, and the total dividend yield has fallen from nearly 10% to 5.2%; short-term absolute upside is limited, but they can provide downside protection during market pullbacks.

If the completed-property sales model is strictly implemented, the average contracted sales of covered developers will decline by 11%, 17%, and 35% respectively from 2026 to 2028, with a compound annual decline of 24%, fundamentally altering capital turnover speed and industry scale.

Model calculations show that shifting from pre-sales to completed-property sales would cause project IRR to plunge from 21.8% to 4.1%, annualized ROE to drop from 5.2% to 3.5%, and capitalized interest expenses to double; developers must significantly increase leverage or rely on selling price increases to maintain profitability.

Eliminating the pre-sale mechanism may slow China Merchants Shekou (CMSK)'s asset turnover and increase capitalized interest expenses; the probability of an absolute share price decline over the next 30 days exceeds 80%, but Equal Weight is maintained due to its strong balance sheet.

Contracted sales of China's top 100 developers rose 16.2% year-on-year in 8, but were mainly driven by state-owned enterprises (17 of the top 20 large ones); the year-to-date cumulative figure still fell 11.5%, and the single-month improvement masks overall weak demand.

Although the transition to completed-property sales can reduce delivery risks, since developers still obtain 45% of their funding from pre-sales, this shift could severely restrict financing channels for cash-strapped private developers, accelerating the new home market's transition to an oligopolistic structure.

The combined core earnings of covered Chinese developers fell more than 60% in 1H26; the pre-sale exit policy could delay cash collection by about two years, and if land acquisition stops in 2H26, new home sales in 2027 could decline by more than 20%.

China's economy displays two-speed characteristics: external demand and technology-related areas are relatively strong, but domestic consumption, real estate, and non-tech downstream industrial margins remain weak, and third-quarter real GDP growth is running below the official target.

China's manufacturing PMI rose slightly to 49.8 in 8 but remained in contraction territory, with high-tech manufacturing expanding for 19 consecutive months while consumer goods and high energy-consuming industries contracted; the gap between input and output prices widened to 6.2 percentage points, squeezing downstream margins.

Disappointing activity data raises the likelihood of policy "fine-tuning" in China, but the expected response is to accelerate execution of the existing budget rather than launch large-scale stimulus, ruling out fantasies of strong stimulus.

Local government special bond issuance accelerated in 8 (accounting for 11.8% of the annual quota), with project reserves focusing on the "six networks" initiative, potentially supporting infrastructure investment in the coming months.

Despite hawkish remarks at Jackson Hole, institutions maintain the view that the Federal Reserve will hold steady; if proven wrong, rate hikes are expected to be gradual (a cumulative 50-75 basis points).

Price-based financial conditions indicators show tightening, but U.S. bank loan growth exceeding 7%, investment-grade bond issuance surpassing USD 900 billion in 8, and broad money expansion indicate that credit creation remains supportive.

Goldman Sachs' base case forecasts U.S. real GDP growth of 2.1% in Q4/Q4 of 2026, core PCE inflation of 2.9%, and the Federal Reserve maintaining rates at 3.5-3.75% for the remainder of the period, with low recession risk.

Beijing is expected to favor promoting a gradual annual appreciation of the RMB against the USD of 3-5% to ease trade frictions and support internationalization, forecasting USDCNY at about 6 by end-2028.

The RatingDog China Services PMI rose to 51.4 in 8, with new business and employment sub-indices improving, but new export orders weakened and input cost pressures rose.

The total size of China's cloud market is expected to grow from RMB 3890 billion in 2025 to RMB 1.729 trillion in 2030; the combined capital expenditure of the top four cloud platforms in 2026 is expected to rise 98% year-on-year to RMB 7260 billion, with AI MaaS and infrastructure as the main engines.

Adoption of Chinese open-source models is strong, with DeepSeek V4 Flash leading usage on OpenRouter and its token share on the Vercel platform rising to 29.7%; cost-effective models are driving API call volumes and underlying computing power demand.

Microsoft Azure growth accelerated to 43% in 4Q26, with management guiding 1Q27 to reach 45%, and paid M365 Copilot seats exceeding 3000 million, proving that enterprise AI applications can effectively translate into actual revenue.

Z.ai's cloud/API revenue beat expectations, with the 8 monthly ARR guidance reaching USD 16 billion; valuations of AI labs should focus on API adoption and ARR expansion rather than traditional on-premise deployment businesses that are actively shrinking.

NVIDIA management expressed confidence in the framework of 70% year-on-year growth for FY28, supported jointly by hyperscalers, neocloud, sovereign AI, and enterprise demand; without supply constraints, business year-on-year growth could more than double.

Dell's FQ2 2027 AI server revenue doubled year-on-year to USD 164 billion, with record orders reaching USD 609 billion and a backlog of USD 950 billion, confirming that AI infrastructure spending has extended to enterprises and new cloud vendors.

In China's software and cloud computing sector, Kingsoft Cloud's AI cloud revenue accounted for 56% of public cloud revenue in 2Q26; AI monetization has become the main positive differentiator, alleviating broad disruption concerns.

Neocloud industry demand was strong in 2Q26, with CoreWeave achieving USD 25.8 billion in revenue and a backlog of about USD 1040 billion; IREN's AI Cloud revenue doubled sequentially, exceeding Bitcoin mining revenue for the first time.

Capacity scarcity gives Neocloud suppliers significant pricing power, with CoreWeave reporting price increases of 25% across all SKUs, and IREN's three-year pricing about 125% higher than in 11.

Neocloud expansion faces extremely high capital intensity, with CoreWeave raising its 2026 CapEx guidance to USD 350-390 billion and IREN's FY27 CapEx guidance at about USD 250-300 billion; financing availability becomes a key risk.

Microsoft restructured its reporting segments, removing GitHub Cloud and others from Azure to form metrics more focused on cloud and AI consumption, and introduced quarterly Azure revenue disclosure (FY26 restated as USD 1019 billion); the underlying growth outlook remains unchanged.

Broadcom's FY3Q26 AI semiconductor revenue rose 221% year-on-year to USD 167 billion, above the expected USD 161 billion; FY4Q26 guidance is USD 217 billion, in line with Goldman Sachs' expectations and above market consensus.

Broadcom management raised its FY2027 AI revenue outlook to about USD 1150 billion and suggested FY2028 could reach USD 2300 billion, establishing its medium- to long-term explosive growth trajectory in AI infrastructure.

As the proportion of AI semiconductor revenue rises, its lower contribution margin is expected to weigh on Broadcom's overall gross margin, with FY4Q26 gross margin expected to fall to about 73%, below consensus of 73.6%.

Some market bulls, based on 10 GW forecasts, expect Broadcom's 2027 revenue potential to exceed USD 1500 billion, while management's specific guidance is USD 1150 billion; this gap with high external expectations has raised concerns about its market share in the TPU ecosystem.

Data center scale-up brings entirely new demand by replacing intra-rack copper connections with optical connections; Lumentum expects NPO demand could begin from late 2027 to early 2028, earlier than previously expected.

PTFE materials may be selectively used in Nvidia Rubin Ultra NVL576 switch trays, but M10/PTFE hybrid materials are more feasible than all-glass-free designs; mainstream NVL72 compute boards will still use M8+ CCL over the next two to three years, confirming the continuity of the CCL upgrade cycle.

The global AI server copper clad laminate market is expected to grow at a 161% CAGR during 2026-28E and reach USD 480 hundred million by 2028E. Kingboard Laminates is shifting capacity toward AI-related products, and vertical integration helps secure supply.

Chaozhou Three-Circle's 1H26 results beat expectations, with rapid MLCC sales growth and data center optical communication demand driving a sharp profit increase. AI server demand may tighten MLCC industry capacity, recreating a cycle of simultaneous volume and price increases.

HSBC Qianhai initiated coverage on Robotechnik with a Buy rating, believing that after its acquisition of ficonTEC it is transforming into a key supplier of photonic assembly and test equipment, and expects net profit CAGR to reach 330% over 2026-28.

Goldman Sachs maintained a Buy rating on Montage Technology; the DDR5 generational upgrade will improve product mix, and new PCIe and CXL products have expanded AI interconnect revenue opportunities.

WUS is expected to benefit from rising PCB requirements for AI servers and high-speed networking equipment. Higher per-rack compute density has increased signal integrity requirements, and PCB usage per AI rack is also rising.

SICC management expects continued adoption of silicon carbide (SiC) materials by EVs and AI data centers and a transition to 8-inch and 12-inch substrates, forecasting net profit to grow at a 87% CAGR during 2026-28E.

Advanced wafers and memory are NVIDIA's primary supply bottlenecks. Rising memory costs and supply constraints could compress platform specifications and create uncertainty around long-term gross margin sustainability.

Apple's DRAM consumption for iPhone production in C1H26 rose nearly 50% year-on-year, and memory supply constraints could delay some iPhone 18 Pro output.

Snowflake's 2Q27 product revenue grew 37% year-on-year to USD 14.92 hundred million, accelerating for the third consecutive quarter. Management attributed about half of the growth to AI products and the other half to increased core platform consumption.

CrowdStrike launched AI security products such as Guardian and SafeMind, expanding the AI security TAM to approximately USD 2150 hundred million. SafeMind achieves a detection rate 29%-37% higher than frontier models with per-task costs up to 99% lower.

AI workloads currently contribute lower margins, causing Snowflake's non-GAAP product gross margin to fall roughly 170bp year-on-year to 74.7%, while it faces broad competition from hyperscalers and AI labs.

In China's software and IT services sector, demand for real estate-related software, financial IT and cybersecurity remains weak. In 7M26, national new home sales area fell 12.7% year-on-year, and Hundsun Wealth Technology and others saw 1H26 revenue decline 11% year-on-year.

Chinese auto parts suppliers faced widespread cost inflation and OEM pricing pressure in 2Q26, but companies with overseas exposure, cost pass-through ability and differentiated products showed resilient margins.

AIDC liquid cooling and precision die casting are expected to deliver the clearest revenue acceleration for auto parts suppliers in 2H26. Minth Group and Fuyao Glass already have substantive project progress, and crossing into the AI supply chain opens a second growth curve.

Horizon Robotics' 1H26 revenue missed expectations and its FY26 shipment guidance was lowered, but its HSD solution has secured design wins with all Top-5 domestic OEMs, and comprehensive penetration among leading automakers lays the foundation for its long-term commercialization.

AAC is leveraging its precision manufacturing and acoustic capabilities to expand into AI data center liquid cooling, edge AI devices and XR optics, which is viewed as a long-term growth driver.

China NEV aggregate orders from key OEMs in week 35 fell 6% sequentially, reflecting the summer off-season, but XPeng, Nio and BYD performed resiliently, and month-to-date NEV wholesale penetration in 8 reached 70.5%.

Morgan Stanley expects gold prices in 4Q26 to be around USD 4450/oz, with a path to rise above USD 5000 in 2027; Goldman Sachs maintains its year-end 2026 fair value forecast for gold at USD 4900/oz, supported by central bank buying and ETF inflows.

Tight mine supply and structural demand (electrification, AI data centers) support copper prices. On a six-year P/NAV basis, copper stocks imply a copper price of USD 6.21/lb, below the spot price of USD 6.55/lb, leaving miners still attractive.

Goldman Sachs is bullish on the copper sector, expecting copper prices to stay elevated in 2H26E driven by tight scrap supply and US stockpiling; conversely, aluminum spreads are expected to narrow as new supply expands, and the lithium market will shift from shortage to surplus.

High sulfur prices and declining MHP output have weakened the profitability of Huayou Cobalt's and GEM's nickel businesses. GEM's MHP nickel shipments fell 37% year-on-year in 1H26, and raw material cost inflation is eroding EV battery material margins.

The energy transition is in an era of energy addition rather than substitution, with global energy use expected to grow at a 1.9% CAGR from 2025 to 2050. Data center electricity consumption is projected to reach 565 TWh in 2026, and grid connection queues are constraining traditional grid supply.

Global oil demand is forecast to grow by about 1.1 mb/d annually from 2027 to 2030, with Brent's mid-cycle equilibrium price estimated at USD 85/bbl in 2030, well above the forward implied average of USD 70/bbl.

China Merchants Energy Shipping management expects VLCC TCE on the TD34 route in 4Q26 to reach at least USD 20 ten thousand/day. Persian Gulf flows below pre-war levels and rerouting have reduced effective fleet capacity, supporting high rates.

Wuliangye's 2Q26 revenue fell 13% year-on-year, in line with expectations. The company is actively destocking through promotions and flexible payment terms; core brand sales surged but average prices declined, and current valuations have fully priced in the transitional pain.

Global private credit fundraising rebounded sharply to USD 990 hundred million in 2Q26, and the CDLI's realized loss rate over the past 12 months was only 47 basis points, dispelling market fears of a systemic collapse.

The software sector accounts for 24% of CDLI weight but contributed 62% of unrealized losses since end-2025. AI disruption is depressing valuations, and the approaching maturity wall in 2028 makes refinancing for software borrowers a key risk.

Big Tech underperformed the S&P 500 for 92% of the time in 2026, as AI CapEx outpaced free cash flow, triggering valuation multiple compression, but over USD 1 trillion in compute-SPV financing could move AI investment off balance sheets starting in 2028, easing concerns.

Overall retail activity fell to the 20th percentile and ETF inflows dropped to the 8th percentile, with funds clearly rotating from software into energy and semiconductors. Tech stocks outside Mag 7 were reduced, reflecting market concerns about AI disrupting traditional software.

Goldman Sachs maintains an overweight on global equities and an underweight on credit for the next 12 months, arguing that rising long-term yields and AI debt issuance weaken bonds' buffer role, and recommends a barbell strategy combining diversified global AI exposure with high-dividend/low-volatility stocks.

The FTSE China 9 quarterly rebalance will increase the index's tech hardware and semiconductor exposure, expected to bring over USD 19 hundred million in two-way passive flows, with Tech Hardware and Semis receiving the largest net inflows and Banks facing the largest net outflows.

Goldman Sachs added Kotak Mahindra Bank and NEC to the APAC Conviction List; the former benefits from a recovery in unsecured loans, while the latter benefits from domestic IT modernization and defense orders in Japan.

CPIC management said NBV CAGR over the past three years was 26% but is expected to slow, equity allocation was raised from 11.2% to 13.9%, and the company will continue to drive margin expansion through product mix adjustments while maintaining a prudent ALM strategy.

Morgan Stanley views Apple's 9 9 launch as the most important since the iPhone X, with the first foldable iPhone expected to start at USD 2399 and adopt TSMC's 2nm process to enhance on-device AI performance.