Guotai Haitong: The electronic industry chain continues to be prosperous, and the demand for overseas AIDC industry investment remains strong.

Guotai Haitong released a research report stating that overseas AI servers are increasing demand for high-performance storage chips, coupled with expectations of tightening supply of low-end storage, driving storage prices significantly higher, with the spot price of DRAM storage rising by +5.6% month-on-month. In September, the Taiwan stock electronic industry chain continued to perform well, with the growth rate of revenue in DRAM storage/connector/IC manufacturing leading the way, reflecting strong demand for overseas AIDC industry investment. The electronic industry chain continues to be prosperous, with durable goods demand being overdrawn. Last week (10.13-10.19), there were differentiated performances in the mid-term prosperity index worth noting: 1) Emerging technology prosperity remains high, with overseas AIDC capital expenditure remaining strong, driving continuous growth in the demand of the electronic industry chain, and the prices of storage that are in tight supply continue to rise significantly. 2) Domestic real estate and construction demand remain weak, the overdrawn effect of durable goods subsidies on demand continues to be evident, but with the continuous advancement of anti-internal competition policies, some industries have made some progress, and the coal industry with strong supply constraints has seen a significant price increase; retail prices of passenger cars, which have reduced intensity of price competition, have improved month-on-month and year-on-year comparisons. 3) The Sino-US tariff game is heating up again, with domestic demand for exports increasing, and ocean freight prices and port throughput volume increasing month-on-month. Continued focus will be on the domestic "14th Five-Year Plan" policy guidance and the progress of China-US trade negotiations. Downstream consumption: real estate sales are weak, and retail prices of passenger cars are stabilizing. 1) Real estate: the year-on-year comparison of the transaction area of commercial housing in the 30 major cities in China is -25.0%. Among them, the year-on-year comparison of the transaction area of commercial housing in first-tier/second-tier/third-tier cities is -36.6%/+1.3%/-42.8%. The year-on-year comparison of the transaction area of second-hand housing in the 10 key cities is -17.6%. The pressure of commercial housing inventory is increasing marginally, and house prices continue to bottom out. 2) Durable goods consumption: the year-on-year comparison of national passenger car retail sales from October 9th to October 12th is +7.0%, with post-holiday demand picking up, initial retail sales volume in October was weak, but leading car companies are resisting internal competition, with overall passenger car retail prices in September rising by +6.8% month-on-month and +3.6% year-on-year; the year-on-year comparison of domestic sales/export volume of air conditioners in September is -2.5%/-18.1%, showing the overdrawn effect of domestic demand and excess overseas inventory suppressing export prosperity. 3) Agriculture and animal husbandry: the year-on-year comparison of pork prices is -6.1%, with the decline widening, mainly due to loose supply and declining demand after the holidays; soybean meal/corn prices are -0.4%/-1.5% month-on-month. 4) Service consumption: post-holiday service consumption prosperity seasonally declines, with the price index for tourism consumption in Hainan showing a month-on-month decrease of -7.8%, and movie box office revenue decreasing by -62.4% month-on-month. Technology & manufacturing: the electronic industry chain continues to be prosperous, while construction demand remains weak. 1) Technology hardware: overseas AI servers are increasing demand for high-performance storage chips, coupled with expectations of tightening supply of low-end storage, driving storage prices significantly higher, with the spot price of DRAM memory rising by +5.6%; in September, the Taiwan stock electronic industry chain continued to perform well, with growth rates in revenue for DRAM storage/connectors/IC manufacturing leading the way, reflecting strong demand for overseas AIDC industry investment. 2) Infrastructure and real estate: domestic construction demand is expected to recover post-holiday, but year-on-year comparisons remain weak, with steel/building material prices oscillating weakly. 3) Manufacturing start-ups: post-holiday commencement rates for automobile steel tires/petroleum asphalt have increased, and there is a slight improvement in companies' recruitment willingness. Upstream resources: coal prices have risen significantly, while industrial metal prices have fallen. 1) Coal: supply constraints in producing areas have strengthened, with daily coal consumption by power plants higher year-on-year, combined with early replenishment of northern winter reserves, leading to a month-on-month increase in coal prices by +5.5%; 2) Non-ferrous metals: Trump announced that new tariffs will be imposed on China on November 1st, putting pressure on industrial demand expectations, resulting in a decline in domestic industrial metal prices. Human flow and logistics: freight logistics prosperity is increasing, with demand for exports rising. 1) Passenger transport: post-holiday long-distance travel demand has decreased month-on-month, with Baidu migration scale index decreasing by -32.8% month-on-month, but increasing by +18.3% year-on-year, while local travel activity remains high. 2) Freight transport: nearing the "Double Eleven" e-commerce festival, domestic freight logistics demand has increased month-on-month, with national highway truck traffic volume/national railway freight volume increasing by +24.7%/+2.3% month-on-month; last week, the national postal express collection/delivery volume increased by +8.8% month-on-month / +14.8% month-on-month. 3) Maritime transport: with the implementation of new US tariffs approaching, the demand for exports has increased, leading to a significant increase month-on-month in ocean freight prices and domestic port throughput volume.