China Tech & Insurance Outlook (with David, Yvonne)

China tech's AI hardware/domestic chip 'catch-up' is the key theme, with cost-competitiveness driving adoption. Insurance sees inflows from maturing deposits. Power equipment benefits from export growth. Expects 2 US rate cuts (late-year focus), no Trump-Xi breakthrough. HK GDP boosted by AI exports; favors export plays, banks, utilities, Macau gaming.

Yields

implicit

Oil

Metals

USD

UBS 8.0
Investment Bank $4300.00B
Eva Lee 8.5

China Tech & Insurance Outlook (with David, Yvonne)

ndx

Eva Lee notes China tech is joining US hyperscalers, implying continued AI-driven upside for NDX.

rut

She sees a modest catch-up for China, which could benefit RUT via rotation from overbought tech.

Eva Lee

China's reopening is modestly positive, focus remains on domestic chips and AI equipment.

US market helped, but China's hedge funds were already up and down; continuation of existing trend.
Eva Lee

International investors find it difficult to get exposure to domestic AI/chip names due to market mechanics and high valuations (50-150x PE).
Eva Lee

DeepSeek's new model is a catalyst for China tech, but fanfare is muted; cost competitiveness (80-90% cheaper) will eventually outshine international peers, similar to EV story.

Performance is 10% below international models but cost advantage is massive.
Eva Lee

Favors big internet platforms despite lack of rally; they are joining US hyperscalers. Consumption sentiment is improving, property market bottoming, but need one more earnings season for a catalyst.
Eva Lee

Insurance is attractive: NBV of top companies up 70%, indicating deposit migration into investments. Expects 10% of maturing deposits to move, which is a big number for momentum.

First destination is insurance because it's safer.
Eva Lee

Power equipment is favorable: extension of US trend, breaking into international markets (e.g., Canada orders), better margins abroad.
Eva Lee

Expects two rate cuts in Q4 2025, not sooner; once Middle East certainty improves, focus shifts to US economy, enabling rate cuts and better bond yields.

Market is too hawkish on China.
Eva Lee

Trump-Xi meeting: expects no breakthrough, only no escalation and extensions. Status quo is the best outcome.

Trade 301 review is being discussed again.
Eva Lee

Hong Kong GDP strength is tied to AI-related equipment exports. Favorable sectors: industrials exposed to exports, banks (good yield), utilities (underperformed), and Macau gaming (domestic tourism boost).
Eva Lee

Likes power equipment as an extension of the US AI story, and because Chinese companies are breaking into international markets (e.g., one company received orders from Canada), which helps earnings and margins.
Asks about fixed income opportunities and whether the market is too hawkish on China.

David
Eva Lee

Still expects two rate cuts, but more in Q4. Once there is certainty on the Middle East, the focus will shift to the US economy, creating an environment for rate cuts and better bond yields.
Asks about expected breakthroughs from the Trump-Xi meeting next week.

Yvonne
Eva Lee

Does not expect a breakthrough, but rather no escalation and extensions. The best outcome is status quo and stabilization.

References the review of trade 301 tariffs.
Asks about Hong Kong-specific investment strategies given the strong economy.

David
Eva Lee

Highlights Hong Kong GDP is driven by AI-related equipment exports. Likes stocks exposed to exports, banks (good yield), utilities, and Macau gaming (if domestic tourism improves).

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