Next week's heavy schedule: "The most important financial report in the entire market" is coming

August 25 - August 31 Weekly Major Financial Events Overview, all times in Beijing:

This week's key focus: US July PCE, Q2 GDP, July durable goods orders data, China's August official PMI, July profits of industrial enterprises above designated size, and the implementation of the 50% "reciprocal tariff" by the US on India.

In terms of earnings reports, NVIDIA, Alibaba, Meituan, LUXSHARE-ICT, Eoptolink, and Zhongji Innolight will release financial data.

Economic Indicators

• US July PCE Price Index Year-on-Year

On the 29th, the US will release the July PCE price index. US service sector inflation is accelerating, highlighting the impact of tariffs. The June PCE price index rose 2.6% year-on-year, higher than the expected 2.5%, with the previous value revised up by 0.1 percentage points to 2.3%. Month-on-month, it remained flat at 0.3% as expected. Meanwhile, consumer spending shows signs of fatigue. Real consumer spending adjusted for inflation grew only 0.1% in June, in line with expectations, failing to reverse the decline from the previous month.

With the US money supply M2 returning to a peak of 5% and PPI rising to high levels, concerns about a "second wave" of inflation are accumulating. Economists warn that the current situation is eerily similar to the 1970s when central banks' premature interest rate cuts led to recurring inflation, making the Federal Reserve's cautious stance crucial.

Citigroup believes that the impact of tariffs on consumer prices is slower and more persistent than the market expects, with August and September being key windows to validate this trend. The PCE price index may reach 3.2% by Q4 2025.

• US Q2 Real GDP Annualized Quarter-on-Quarter Revision

The preliminary value released last month showed that the US GDP, excluding inflation factors, grew at an annualized rate of 3% in Q2, reversing the contraction in Q1 and significantly exceeding the market expectation of 2.6%. However, in-depth analysis reveals that this prosperity is deceptive. The sharp decline in import volumes artificially inflated the overall data, masking the evident slowdown in domestic demand.

UBS recently predicted that US GDP will significantly slow from a 2.0% annual growth rate in Q2 to 0.9% in Q4, well below the consensus expectation of 1% among economists. The report points out several reasons supporting this judgment:

Pre-tariff purchasing demand has been exhausted, excess savings have been depleted, immigration has slowed, the "Infrastructure Investment and Jobs Act" will pose a slight fiscal drag in 2025, and effective interest rates are rising during debt extensions.

However, UBS also specifically noted in the report that despite the upward risks to the US economy, the trend of economic slowdown is difficult to avoid. The report highlighted potential factors driving economic growth, including:

• A 10% rise in stock prices could contribute 0.6%-1% to GDP through the wealth effect;

• Capital expenditures related to generative AI: UBS predicts that capital expenditures for large-scale companies will increase by 60% this year;

• Investment returning to the U.S.: Investments promised by South Korea, Japan, and the European Union in recent tariff negotiations amount to 5% of GDP over the next three years;

• Loose financial conditions.

• U.S. July Durable Goods Orders Month-on-Month Preliminary Value

On the 26th, the U.S. released the preliminary value of July durable goods orders month-on-month. Last month, U.S. durable goods orders in June plummeted by 9.3% month-on-month, a decline slightly better than market expectations, but still the worst performance since the pandemic began in 2020. This sharp fluctuation was mainly due to a significant adjustment in non-defense aircraft orders, which surged by 230% month-on-month in May but fell by 50% in June.

Excluding the impact of Boeing orders, core data showed robust performance. Durable goods orders increased by 0.25% month-on-month, better than the expected 0.1%, and rose by 2.23% year-on-year. In the first half of this year, business planners faced dual challenges from policy: frequently changing tariffs and uncertainty surrounding tax and spending legislation. This environment significantly suppressed corporate investment willingness.

• China's August Official Manufacturing PMI

On the 31st, China released the official manufacturing, non-manufacturing, and composite PMIs for August. Last month, the manufacturing PMI fell to 49.3%, indicating a decline in manufacturing prosperity compared to the previous month. The new orders index was at 49.4%, suggesting a slowdown in market demand for manufacturing.

Tao Chuan from Minsheng Macro believes that the effects of the "anti-involution" policy are beginning to diverge. Although price expectations have improved immediately, production has begun to slow down in stages; after entering a new phase of trade, the export prosperity has changed, with the leading PMI new export orders index forecasting marginal downward pressure on July exports. Guosheng Securities believes that subsequent policies may "support without lifting" and flexibly increase.

• China's July Profits of Industrial Enterprises Above Designated Size Year-on-Year

Last month's data showed that in June, the profit decline of industrial enterprises above designated size narrowed by 4.8 percentage points compared to May, with significant improvement in manufacturing. The automotive industry saw profits grow by 96.8% due to rapid sales growth driven by promotions from car manufacturers and increased investment returns from key enterprises. The effects of the "two new" policies continue to show, with profits in industries such as intelligent unmanned aerial vehicle manufacturing and computer manufacturing growing by 160.0% and 97.2%, respectively.

Financial Events

• The U.S. imposes an additional 25% tariff on India, bringing the total tariff rate to 50%

According to Xinhua News Agency on August 6, U.S. President Trump signed an executive order on the 6th, imposing an additional 25% tariff on products imported from India, citing India's "direct or indirect import of Russian oil." This means that the overall tariff rate on Indian products entering the U.S. will reach 50%. The announcement stated that, with some exceptions, the new tariff measures will take effect 21 days after the executive order is published. According to the executive order signed by Trump on July 31, the U.S. will begin imposing a 25% tariff on Indian products entering the U.S. starting August 7. With the additional tariffs announced on the 6th, Indian products entering the U.S. will be subject to a total tariff rate of 50% Indian companies are facing the most severe earnings forecast downgrades in Asia. Analysts have significantly cut their earnings expectations for Indian firms, highlighting the impact of trade tensions on the region's third-largest economy. According to the latest data from LSEG IBES, in the past two weeks, earnings forecasts for Indian large and medium-sized enterprises for the next 12 months have been downgraded by 1.2%, the largest decline in Asia. A recent Bank of America fund manager survey shows that the status of the Indian stock market has dramatically reversed in just two months, falling from the most favored Asian market to the least popular.

Despite India's economy being primarily driven by domestic demand, with only 9% of the revenue of Nifty 50 index constituents coming from the U.S. market, tariff threats still pose significant risks to economic growth. To address this challenge, according to a previous article from Wall Street, Indian Prime Minister Modi plans to reform the Goods and Services Tax, aiming to reduce and simplify the four tax brackets of 5%, 12%, 18%, and 28% into two brackets of 5% and 18%, to boost the economy while addressing tariff impacts. Standard Chartered Bank economists expect this tax reform to contribute 0.35-0.45 percentage points to GDP growth in the fiscal year 2027.

Financial Reports

• NVIDIA

NVIDIA will release its latest financial report next Wednesday, with the third-quarter guidance expected to be the market's focus. A recent report from KeyBanc Capital Markets indicates that NVIDIA may temporarily exclude direct revenue from the Chinese market in its guidance for the next fiscal quarter, as the specific timing for semiconductor export license approvals under U.S. export restrictions remains uncertain.

KeyBanc analysts stated that including the Chinese business based on chips like H20 and RTX6000D (B40) could have brought NVIDIA an incremental revenue of $2 billion to $3 billion. Currently, the market generally expects NVIDIA's third-quarter revenue to be $45.92 billion, with earnings per share of $1.01. Capacity improvements support the fundamentals. Despite facing short-term uncertainties in the Chinese market, NVIDIA's business fundamentals remain strong, providing robust support for its long-term growth.

KeyBanc emphasized in its report that NVIDIA's GPU supply and capacity are significantly improving, which is a core driver of its continued strong performance. Data shows that in the fiscal quarter ending in July, NVIDIA's GPU supply increased by 40%, and it is expected to grow another 20% by the fiscal quarter ending in October as B200 ramps up; meanwhile, the updated and more powerful B300 chips are set to start shipping in the October quarter and are expected to account for half of the Blackwell series shipments.

Additionally, the production efficiency of server racks is also improving. The report noted that the manufacturing yield of GB200 racks by server ODM manufacturers has approached 85%, with rack shipments expected to reach 15,000 to 17,000 units by the end of the year. Therefore, the firm has raised its forecast for annual GB200 rack shipments from 25,000 units to 30,000 units Wall Street maintains optimistic expectations. KeyBanc analyst John Vinh raised Nvidia's target price from $190 to $215 while issuing a warning, maintaining an "overweight" rating. Susquehanna analyst Christopher Rolland also sees continued momentum in Nvidia's data center business, raising its target price from $180 to $210 and maintaining a "positive" rating. Despite two Wall Street firms raising their target prices, the market response remains relatively cautious.

• Alibaba

Alibaba Group will announce its Q1 results for the fiscal year 2026 on the 29th, which will be a key window to test the effectiveness of its "user-first, AI-driven" strategic transformation. Several brokerages predict that the overall profit of the group will be significantly pressured due to the 50 billion yuan subsidy plan for Taobao Flash Sales.

According to Guohai Securities' forecast, Alibaba's total revenue for Q1 of fiscal year 2026 is expected to reach 249 billion yuan, a year-on-year increase of 2%, but adjusted EBITA is expected to decline by 15% year-on-year to 38.2 billion yuan, with profit margins dropping to 15%. Dongfang Securities and Morgan Stanley also provided similar forecasts, believing that the combined EBITA of Taotian Group and the local life group will drop significantly by 16%-20%.

Brokerages generally attribute the profit decline to the massive subsidy investment in the flash sales business. Since announcing the 50 billion yuan subsidy plan on July 2, the daily order volume for Taobao Flash Sales has rapidly climbed from 10 million to 80 million, but this aggressive expansion strategy has led to an expected adjusted EBITA of -5.7 billion yuan for the local life division, significantly worse than the market expectation of -1.12 billion yuan.

In contrast to the profit pressure in the e-commerce business, Alibaba Cloud is showing strong growth momentum. Brokerages predict that the Cloud Intelligence Group's Q1 revenue will reach 32.5 billion yuan, a year-on-year increase of 22%, with AI-related product revenue achieving triple-digit growth for seven consecutive quarters, likely becoming a new profit growth point for the group.

• Meituan

Meituan is scheduled to announce its Q2 results on August 27, 2025. The market generally expects the company to record robust revenue growth in the upcoming Q2 financial report, but its profitability is facing significant pressure due to the fierce subsidy war in its core takeaway business, making this performance disclosure an important moment to test its strategic resilience.

According to performance forecasts provided by Chaoyang Yongxu, analysts predict that Meituan's Q2 revenue will be between 92.404 billion yuan and 95.670 billion yuan, a year-on-year increase of 12.3% to 16.3%. However, profit forecasts have raised red flags, with expected net profit declining by 29.3% to 50.6% year-on-year, and adjusted net profit also expected to decrease by 17.7% to 46.9% year-on-year. This expectation aligns with the guidance provided by the company's management after the Q1 financial report. Although Meituan's Q1 performance exceeded market expectations, management had clearly warned at that time that due to intensified market competition and aggressive subsidy activities in the takeaway sector, the gross margin for Q2 would experience "significant compression."

The takeaway business remains the strategic core of Meituan and is the main source of current profit pressure. Haitong International Securities pointed out in a report that in the face of subsidy competition from JD and Ele.me, Meituan's management has stated its willingness to "take all necessary measures" to defend its market leadership position The instant retail business (Meituan Flash Purchase) is one of the biggest highlights. According to data from Haitong International Securities, the order volume of this business achieved a year-on-year growth of 50% in the first quarter, with growth driven mainly by fast-moving consumer goods and high-value items such as electronics and home appliances. This indicates that consumer demand for instant delivery is extending from food delivery to a broader range of retail categories. The in-store business also performed steadily. Thanks to support in projects such as education and fitness, as well as the expansion of services and healthcare categories, Meituan's annual active merchant count grew by over 25% year-on-year in the first quarter.

• LUXSHARE-ICT

LUXSHARE-ICT Announcement states that the company submitted an application for the issuance of overseas listed shares (H shares) and listing on the main board of the Hong Kong Stock Exchange on August 18, and published the application materials for this issuance on the Hong Kong Stock Exchange website on the same day.

Public information shows that LUXSHARE-ICT was founded in 2004 and has grown into an innovative technology enterprise in the global precision intelligent manufacturing field after more than twenty years of development. The company mainly focuses on providing comprehensive products and services for consumer electronics, automotive electronics, communication and data centers, and other high-tech fields, covering cross-domain vertical integration development and intelligent manufacturing solutions from precision components and functional modules to complete systems.

The prospectus reveals that from 2022 to 2024, LUXSHARE-ICT achieved revenues of 214 billion, 231.9 billion, and 268.8 billion yuan respectively. The net profits during the same period were 10.5 billion, 12.2 billion, and 14.6 billion yuan, showing steady growth. In the first quarter of 2025, LUXSHARE-ICT continued its growth momentum, achieving revenue of 61.8 billion yuan, a year-on-year increase of 17.9%. The net profit was 3.4 billion yuan, a year-on-year increase of 31.3%.

Specifically, LUXSHARE-ICT's business is mainly divided into four major sectors: consumer electronics, automotive electronics, communication and data centers, and others. Among them, the consumer electronics business remains the absolute cornerstone of its revenue. In 2024, this business segment contributed revenue of 233.1 billion yuan, accounting for as much as 86.7% of total revenue. According to the data disclosed in the prospectus, based on 2024 sales, one out of every two smartphones and one out of every three smart wearable devices globally uses the company's products.

• Mixue Group

Mixue Group announced on the Hong Kong Stock Exchange that the board meeting will be held on August 27, 2025 (Wednesday) to consider and approve the group's interim results for the six months ending June 30, 2025, and to handle other matters