2026-09-09 Daily Quick Read | Hilo Research

China's exports in 8 grew approximately 25% year-on-year, and the trade surplus widened to a historic high of USD 1191 billion, of which integrated circuit export value surged 130.6% year-on-year to a cyclical high; AI-related products contributed the vast majority of the overall export growth acceleration. However, volume-price decomposition shows this momentum relies heavily on rising chip prices rather than actual shipment expansion, while deeply negative growth in crude oil imports reflects weak domestic demand.

Morgan Stanley expects newly auctioned land and projects without planning permits in China to shift from pre-sales to completed-property sales, extending developers' capital turnover cycles from two years to three to four years. Accordingly, it has comprehensively lowered its 2026 forecasts for primary home sales area, sales value, new starts, completions, and investment, and raised the estimated drag of real estate on nominal GDP growth.

JPMorgan notes that Hon Hai's sales in 8 rose 52% year-on-year, with its cloud and networking business growing significantly on the back of AI server and GB300 momentum, and expects AI server revenue to grow 130% and 70% in 2026 and 27, respectively. Meanwhile, Goldman Sachs and Morgan Stanley emphasize that AI data center demand is driving upgrades in optical network specifications; Everbright Photonics' laser capacity will achieve consecutive triple-digit growth, and SG Micro has also entered the 800G/1.6T optical module supply chain.

JPMorgan, Morgan Stanley, and Deutsche Bank are all positive on BYD's globalization strategy; management guided overseas sales of nearly 200 million units in 2026 and over 250 million units in 2027, with overseas per-vehicle profit stable at about RMB 2 ten thousand. Domestically, despite pressure from flat or declining demand, the Gen2 Blade Battery and ultra-fast charging technology are expected to drive product mix upgrades and maintain core per-vehicle profitability, while the company is accelerating the construction of 9 million ultra-fast charging stations and expanding into energy storage to build an ecosystem moat.

JPMorgan expects global ESS installations to maintain strong growth of over 50% in 2026-27, and China's NDRC has set a 180GW target for 2027; however, rising lithium prices, higher LFP cell costs, and reduced export tax rebates are squeezing midstream integrators' margins. Meanwhile, Morgan Stanley notes that inventory across the battery supply chain is low and capacity is tight, and if approvals for new capacity are restricted, shortages could persist into 2027.

Morgan Stanley notes that copper supply-demand is tighter than macro sentiment suggests and high-end glass fiber cloth remains in shortage, but traditional steel demand is weak; JPMorgan believes the investment thesis for Chinese gas utilities is shifting toward free cash flow and dividends, with Kunlun Energy and ENN Energy as top picks due to clear shareholder returns; Nomura emphasizes that China's healthcare sector delivered solid results in 1H26, CRDMO backlog orders grew strongly, and innovative drug commercialization remains the core engine.

JPMorgan notes that China's foreign exchange reserves in 8 increased by USD 195 billion, beating expectations and pointing to strong exports, but a tactical bullish view on the USD may cap near-term RMB gains. The bank also proposed a pair trade of long CICC-H and short Galaxy-H, reflecting divergence in the brokerage sector as retail brokerage weakens while institutional investment banking accelerates. Morgan Stanley observed broad southbound fund outflows from the Hong Kong-listed insurance sector in 8, but strong 1H26 results are likely to reverse this trend in 9.

Morgan Stanley notes that the Encinal power project in Texas could become the first Korean project worth about USD 223 billion under the Korea-US Strategic Investment Act, and a potential memorandum of understanding could cover up to eight US nuclear reactors, offering long-term order upside for Doosan Enerbility's gas turbines and nuclear equipment. However, as specifications are undecided and there is no timeline, this cannot yet be viewed as an immediately quantifiable financial catalyst.