Institutional Research

The report expects 25bp hikes in December 2026 and March 2027, taking the federal funds target range to 4.25-4.50%. It interprets Chair Warsh's description of the September move as removing accommodation, alongside higher neutral-rate estimates and geopolitical inflation risks, as evidence of further tightening.

• The Fed raised its policy rate 25bp to 3.75-4.00%.
• Morgan Stanley revised its cumulative tightening forecast to 75bp from 50bp.
• The forecast calls for a 4.25-4.50% terminal range in 1Q27, held through 2027.
• The longer-run neutral-rate estimate rose to 3.25% from 3.06%.
• An October hike remains possible, although the base case is for December and March moves.
• Middle East de-escalation, lower energy prices, or faster disinflation could reduce the need for further hikes.

Morgan Stanley’s Day 2 conference wrap identifies upcoming data releases and competitive benchmarks that could shape differentiation for China biotech assets. The institution maintains an Attractive industry view for Asia Pacific China Healthcare.

• YE26 data for STAT6 programs and ICP-332 are expected to test oral conversion in atopic dermatitis.
• Bispecific AD programs will compete on EASI-90/100 response depth and durable dosing.
• IBI302 and IBI324 face clinical differentiation tests in ophthalmology.
• Zai Lab’s zoci first-line SCLC data at ESMO is a key readout for earlier-line combination potential.

Morgan Stanley maintains Overweight and a US$52 target after raising its 2026 operating-profit forecast, as better margins and buybacks offset weak domestic demand and slower revenue momentum. Overseas expansion and operating efficiency remain the principal longer-term supports.

• Management guided to 1-6% revenue growth in 3Q26, compared with 5.5% in 2Q26.
• Morgan Stanley expects 3Q26 operating margin of 31-31.5%, above its and consensus' previous 29% expectation.
• The 2026 non-GAAP operating-profit forecast rises 6.1%, while 2027 and 2028 forecasts fall 1.0% and 3.6%.
• 2027 and 2028 revenue forecasts are cut 3.6% and 5.7%, mainly on lower hotel and advertising assumptions.
• Consensus-basis EPS forecasts rise 17.2%, 8.4% and 5.4% for 2026-28, helped by the lower share count.
• The unchanged US$52 DCF target implies 32% upside from the US$39.25 closing price.

Morgan Stanley's Laguna Day 1 takeaways point to firm high-end truck and SUV demand while GM, Rivian and Scout pursue distinct EV, software and autonomy strategies. The report emphasizes execution—especially Rivian's R2 supplier ramp—as the key near-term proof point.

• GM expects 2027 earnings growth despite commodity-cost pressure, supported by truck mix, lower EV losses, warranty improvement, digital revenue and defense growth.
• Rivian's R2 demand indicators are strong, but supplier readiness, production scale, BOM reduction and margin improvement remain central.
• Scout reports that 87% of reservations are for its EREV configuration and targets 2028 customer deliveries.
• Morgan Stanley sees software and services as GM's largest valuation-unlock opportunity and autonomy as a longer-term demand and pricing lever for Rivian.

CR Micro delivered in-line 2Q26 revenue but better-than-expected margins and earnings as pricing, utilization and operating efficiency improved. Goldman Sachs raises 2026E net income by 2% and keeps its Rmb77.02 target price and Neutral rating.

• 2Q26 revenue was Rmb3.271bn, in line with Goldman Sachs estimates and Bloomberg consensus.
• 2Q26 net income reached Rmb390m, up 53% year-on-year and 18% quarter-on-quarter.
• Gross margin rose to 27.6%, supported by higher product prices and improved utilization.
• Goldman Sachs expects 3Q26 revenue of Rmb3.5bn, up 25% year-on-year.
• The 2026E net-income forecast rises 2%, while 2027E–28E estimates are largely unchanged.
• The Rmb77.02 target price is based on 37.4x 2028E P/E.

Goldman Sachs' expert-call takeaways lower expected 2030 800VDC penetration and push likely mass SST deployment to 2029. The report nevertheless argues that non-AI data centers and traditional power architectures should remain the larger opportunity through 2032.

• Expected 2030 800VDC penetration was reduced to 21% of US new-build data centers and 17% in Europe.
• AI inference has lower rack-density needs than training, preserving the viability of traditional architectures.
• Full 800VDC architectures are not expected for at least five years; early deployments are more likely to electrify servers while retaining conventional systems elsewhere.
• SST mass deployment is unlikely before 2029 because vendor testing and post-selection ordering could take another 12-18 months.
• Traditional architectures are expected to remain dominant in 2032 and may carry higher margins than 800VDC.

The report argues that weaker US data, fiscal concerns and policy uncertainty have undermined the USD, though HSBC still expects a gradual recovery in its baseline. It highlights downside risks to EUR-USD, potential JPY support from a hawkish BoJ and domestic portfolio shifts, and a lower EUR-CHF into Q4 2026.

• HSBC lowers its 3Q26 and 4Q26 USD-JPY forecasts to 158 and 160 from 161 and 162, while retaining 164 for mid-2027.
• The report expects gradual EUR-USD weakening into 2027 as energy, trade-balance and political risks re-emerge.
• HSBC maintains a year-end EUR-CHF forecast of 0.91, citing rich valuation, recovering Swiss trade data and firmer inflation.
• The next major USD tests are the FOMC meetings on 16 September and 28 October and the US midterms on 3 November.
• Highlighted regional themes include lower EUR-CHF, higher AUD-CAD, higher JPY-KRW, lower USD-TWD, higher INR-IDR, higher EUR-HUF, lower BRL-MXN and lower USD-PEN.

Following the Q2 2026 rally and decade-high sector multiples, HSBC argues that clinical readouts, franchise adjacency and patent-cliff management will differentiate winners from value traps. Its preferred Buy-rated names are AbbVie, Johnson & Johnson, Merck, Bayer and Sanofi; Eli Lilly is the least preferred.

• HSBC mapped and scored more than 100 clinical catalysts through 2027 using a consistent forensic framework.
• The sector additional risk premium is cut to 25bp from 75bp, raising target prices broadly.
• Novartis is upgraded to Hold from Reduce with a CHF110 target; Amgen is downgraded to Hold from Buy with a USD425 target.
• HSBC argues that adjacent launches into established franchises can create outsized operational leverage, while LOE can create disproportionately large profit downside.
• The report views make-or-break catalysts as frequently offering poor risk-reward despite their volatility.