摩根大通-中国二季度经济跟踪0719

AsiaPacificEconomicResearch

15July2024

China

2QGDPmissesexpectationsasactivityremainsfragile,unstableanduneven;revisingdown2024growthforecastto4.7%

•China’s2QGDPcameinnotablybelowexpectations,growing4.7%oya.Ourseasonaladjustmentsuggeststheeconomy’sgrowthmomentumslowednotablyto1.0%q/qsaarin2Q,followingsolid1Qgrowthat7.%q/qsaar.

•Juneactivitydatacontinuestosendmixedsignals,withupsidesurpriseinIPgrowth,steadyexportactivityandsolidmanufacturingFAIgrowthontheonehand,andnotabledownsidesurpriseinretailsales,alongwithongoinghousingdrag.

•Onindustrialproduction,JuneIPcameinaboveexpectations,growing5.3%oya,orrisingnotablyby1.1%m/msabyourestimate,followingamoderateincreaseof0.4%m/msainMay.

•DomesticconsumptiondemandshowednotabledownsidesurpriseinJune,followingtemporaryimprovementinMay.Retailsalesgrewatasubduedpaceof2.0%oyainJune,orfalling1.3%m/msa.Serviceproductiongrowthalsoeasedsomewhatto4.7%oyainJune(vs.4.8%oyainMay).

•Fixedinvestmentcameinlinewithexpectations,rising3.9%oyainJan-Jun,orrising3.6%oyainJune.Furtherbreakdownshowsongoingweaknessinrealestateinvestment(whichfell10.1%oyainJune),withcontinuousoutperformanceinmanufacturinginvestment(+9.3%oya)andamoderateeasingininfrastructureinvestmentgrowth(+4.6%oya).

•The2QGDPreportandJuneactivitydatashowedthateconomicactivityinChinaremainsfragile,unstableanduneven.Inresponsetothe2QGDPdisappointment,ourfull-yeargrowthforecastisreviseddownto4.7%(previously:5.2%),assuming4.0%q/qsaargrowthfor3Q,and5.0%q/qsaarfor4Q.

•Ourforecastscenarioisbasedontheassumptionofneutralormodestlysupportiveeconomicpolicyin2H,withnoadditionalstimulus.Intheabsenceofmajorstructuralreformsfromthe3rdPlenum(tobeheldthisweek)andmeaningfulcounter-cyclicalpolicyadjustmentinthepolitburomeetinglaterthismonth,theofficialfull-yearGDPgrowthtargetof“around5%”willriskamodestundershooting.

China’s2QGDPcameinnotablybelowexpectations,registering4.7%oyagrowth(J.P.Morgan:5.4%;consensus:5.1%),following5.3%oyagrowthin1Q.For1H24,GDPgrowthcameinat5.0%oya.Basedonourseasonal-adjustmentprocess,insequentialterms,theeconomy’sgrowthmomentumslowednotablyto1.0%q/qsaarin2Q,followingthesolidexpansionof7.4%q/qsaarin1Q.Forcomparison,theNBSseasonallyadjustedseriessuggestsGDPgrew0.7%q/qsain2Q,followinggrowthof1.5%q/qsain1Q24.

Seepage8foranalystcertificationandimportantdisclosures.

EmergingMarketsAsia,EconomicandPolicyResearch

HaibinZhu

(852)2800-7039

haibin.zhu@

GraceNg

(852)2800-7002

grace.h.ng@

TingtingGe

(852)2800-0143

tingting.ge@

JiYan

(852)2800-7673

ji.yan@

JPMorganChaseBank,N.A.,HongKongBranch

2

HaibinZhu(852)2800-7039haibin.zhu@

JPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002

grace.h.ng@

TingtingGe(852)2800-0143tingting.ge@

JiYan(852)2800-7673ji.yan@

AsiaPacificEconomicResearchChina

15July2024

Besides,innominalterms,2QGDProse4.0%oya,comparedto4.2%oyagrowthin1Q.TheimpliedGDPdeflatorfell0.7%oyain2Q,comparedto-1.1%oyain1Q.ThenominalGDPgrowthof4.1%oyain1H24alsomarkedthesecondworstinrecord(onlybetterthan1H20duringCOVIDoutbreak).Inaddition,breakdownbyexpendituresuggests,outof5.0%oyarealGDPgrowthin1H,consumptionexpenditurecontributed3.0%-pt;grosscapitalformationcontributed1.3%-pt,andnetexportscontributed0.7%-pt.

Juneactivitydatahighlightsretailsalesweaknessandongoinghousingdrag,withuptickinindustrialproduction

MajorJuneactivitydatacontinuestoshowweaknessindomesticdemandconditions,withuptickinindustrialproductionactivity.JuneIPcameinaboveexpectations,rising5.3%oya(J.P.Morgan:4.6%;consensus:5.0%),comparedto5.6%oyainMay.Onourestimates,IPpickedupnotablytogrow1.1%m/msainJune,addingtothegainof0.4%m/msainMay.FurtherdetailssuggestmodestgrowthinelectricityproductioninJune(2.3%oya),moderategrowthinelectricmachineryequipmentproduction(4.4%oya),solidgrowthinautoproduction(6.8%oya),andsignificantgrowthinproductionofcommunication,computerandotherelectronicequipment(11.3%oya).Productionactivityinconstruction-relatedsectorscontinuedtounderperform,includingafurtherdeclineincementproduction(-10.3%oyainJune),whilecrudesteeloutputshowedmarginalpositivegrowth(+0.2%oya).

Regardingdomesticdemandconditions,fixedinvestmentcameinlinewithexpectations,growing3.9%oyaforJanuary-June(J.P.Morgan:3.8%;consensus:3.9%),orgrowing3.6%oyainJune(vs.3.5%oyainMay).FurtherdetailssuggestacontinuingcontractioninrealestateFAI,withoutperformanceinmanufacturingFAI,alongwithamoderateeasingininfrastructureFAIgrowth.Infurtherdetails,manufacturingFAIgrowthcameinatasolid9.3%oyainJune(vs.9.4%oyainMay),andinfrastructureFAIgrowtheasedmoderatelyto4.6%oya(vs.4.9%oyainMay).Meanwhile,realestateinvestmentremainedweak,contracting10.1%oyainJune(vs.-11.0%oyainMay).Byownershipbreakdown,privateinvestmentshowedmodestgrowthat0.1%oyainJan-Jun(unchangedfrom+0.1%oyainJan-May),whilepublicinvestmentrose3.8%oya(vs.7.1%oyaforJan-May).

HousingmarketactivitystayedsoftinJune,thoughtheannualpaceofdeclineeasedmoderately,partlyhelpedbylowbaseeffect.Newhomesales(area)fell14.3%oyainJune(vs.-19.0%oyainMay),andnewhomesale(value)fell12.2%oya(vs.-26.4%oyainMay).Newhomestarts(floorspace)fell18.3%oyainJune(vs.-22.2%oyainMay).Meanwhile,followingstronggrowthlastyear,newhomecompletion(area)hasslowedrecently,falling30.6%oyainJune(vs.-12.3%oyainMay).

Regardingconsumerdemandconditions,nominalretailsalescameinnotablybelowexpectations,growing2.0%oyainJune(J.P.Morgan:3.6%;consensus:3.4%),comparedto3.7%oyainMay.Insequentialterms,weestimatethatretailsalescontracted1.3%m/msainJune,largelyoffsettingthereboundof1.5%m/msainMay.Infurtherdetails,autosales(innominalterms)fell6.2%oyainJune(vs.-4.4%oyainMay),whileretailsalesex-autorose3.0%oya(vs.4.7%oyainMay).Seasonallyadjusted,weestimateautosalesrose0.7%m/msainJune,whileretailsalesexcludingautocontracted1.6%m/msa.Lookingback,thepickupinMayretailsales(1.5%m/msa)seemedtobepartlyduetofront-loadedconsumptionspending(e.g.earlierstartofthe6.18salespromotionperiod),whichwasnotsustainedinJune.

Infurtherdetailsintheretailsalesreport,cateringexpenses/restaurantspendinggrewatasteadypaceof5.4%oyainJune.Regardingsalesofconsumergoods,arangeofsectorsregisteredratherweaksalesdatainJune,includingsalesofhouseholdelectronicappliances

3

HaibinZhu(852)2800-7039haibin.zhu@

JPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002

grace.h.ng@

TingtingGe(852)2800-0143tingting.ge@

JiYan(852)2800-7673ji.yan@

AsiaPacificEconomicResearch

15July2024

(falling7.6%oya),clothing/shoes(-1.9%oya),cosmetics(-14.6%oya),jewelry(-3.7%oya),sportsandentertainmentproducts(-1.5%oya),constructionandrefurbishmentmaterials(-4.4%oya),etc.Meanwhile,afewothersalescategoriesshowedmodestpositivegrowthinJune,includingsalesofinformationandcommunicationequipment(+2.9%oya),fooditems(10.8%oya),dailyuseitems(+0.3%oya),medicalproducts(4.5%oya),andfurniture(+1.1%oya).

Regardingservicesectoractivity,theserviceproductionindexrose4.7%oyainJune(vs.4.8%oyainMay),ledbyinformationtransmission,softwareandIT(13.5%oya),leasingandcommercialservices(9.7%oya),transportation,storageandpostalservices(5.4%oya).Regardinglabormarketconditions,thenationwideurbansurvey-basedunemploymentratestayedunchangedat5.0%inJune.Besides,theNBSreportedthatnationwideaveragehouseholddisposableincomepercapitarose5.3%oyainrealtermsin1H24,andgrew5.4%oyainnominalterms.

Economicactivityremainsfragile,unstableanduneven

Overall,the2QGDPreportandJuneactivitydatashowedthateconomicactivityinChinaremainsfragile,unstableanduneven.

First,theunevengrowthisillustratedbycomparingsupplyanddemandsideindicators.In1H24,IP(inrealterms)rose6%oyabutretailsales(innominalterms,withinflationclosetozero)onlyrose3.7%andserviceproductionindexrose4.6%.Thisisattributedtodemand-supplyimbalancesanddeflationpressureintheeconomy.Whiledeflationpressureeasedoffmodestlyin2Q(GDPdeflatorfrom-1.1%oyain1Qto-0.7%oyain2Q,mainlybenefitingnarrowingPPIdeflationfrom-2.7%oyain1Qto-1.6%in2Q),itdidnotgoaway(GDPdeflatorwillstillstaynegativeinthecurrentquarter)andthelowinflationenvironmentwillcontinuetostayaround.

Second,thecontrastingperformancebetweenout-performingandunder-performingsectorsdoesnotchange.Theliftfrommanufacturinginvestment(rising9.5%oyain1H24),greensectorsandexports(exportvolumerose12.7%oyainJan-May)iscriticalforChinatomaintain5%oyagrowthin1H,butthedragfromthehousingmarket(realestateinvestmentdeclined10.1%oyain1H24)andunstableperformanceindomesticconsumptionhurttherecovery.Thegovernmenthasrolledoutpolicymeasurestoaddresstheweaklinksintheeconomy,butthepolicyeffectseemslimited.Forinstance,thenewroundofhousingstabilizationmeasuressinceMay17hasledtosomestabilizationinhousingactivityinJune,butthestabilizationseemstobedrivenbyseasonalpatterns.Ontheconsumptionside,trade-insubsidyforNEVsaleshasbeensupportiveforautosales,buttrade-insubsidyforhomeapplianceisstillabsenthencesalesofhouseholdelectronicapplianceisweak(falling7.6%oyainJune).Overall,policysupportisstillbiasedonproduction(especiallyadvancedmanufacturingandgreensectors).

Third,themonthlydatashowsunstableactivity.Forinstance,IPandretailsaleshadasolidrecoveryinJan-Febthisyear,butthencontracted(in%m/msaterm)inMar-Apr.ActivityinMayandJuneshowedsomerecovery,butitwasincompleteandunstable.Thisisrelatedtothevariationinpolicyresponses.BetweenJuly2023andearly2024,economicpoliciesshiftedtowardgrowth-friendly.However,afterAprilbothfiscalandmonetarypoliciesseemedtohavereversed.Onthefiscalside,thepaceofspeciallocalgovernmentbondissuanceisnotablybehindnormalyears(only38%offull-yearquotahasbeenissuedin1H,vs.71%innormalyears).Onthemonetarypolicyfront,thePBOChasbeenreluctanttocutpolicyrates,insteaditisconcernedaboutthedeclineinlong-endCGByieldsandhastakenmeasurestostabilizefront-endandlong-endinterestratesinrecentmonths,andhasde-emphasizedthenotabledecelerationincreditandmoneysupplygrowth.

4

HaibinZhu(852)2800-7039haibin.zhu@

JPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002

grace.h.ng@

TingtingGe(852)2800-0143tingting.ge@

JiYan(852)2800-7673ji.yan@

AsiaPacificEconomicResearchChina

15July2024

Policyresponsesmatter:whatcancomeoutofthetwopolicymeetingsinJuly?

Inresponsetodisappointing2QGDPdata,ourfull-yeargrowthforecastisreviseddownto4.7%oya(previously:5.2%).Inbreakdown,consumption,investmentandnetexportswillcontribute2.8%pts,1.5%ptsand0.4%pt,respectively,toGDPgrowth.WemaintainourforecastthatChina’seconomicgrowthwillreturntotrendgrowthataverage4.5%q/qsaarin2H,butthepaceissomewhatdelayedinthatnowweforecast3QGDPgrowthat4.0%q/qsaar(previously:4.5%)and4QGDPgrowthat5.0%q/qsaar(previously:4.5%).GDPdeflatorwillremainnegativeat-0.5%oyain2024,whichimpliesnominalGDPgrowththisyearat4.1%oya(previously:4.7%),thesecondworstinrecord(thelowestwas2.7%in2020).

Ourforecastisbasedontheassumptionthateconomicpolicywillturnneutralormodestlysupportivein2H,butthereisnoadditionalstimulus.Onthefiscalside,theemphasiswillbetofullyutilizethefiscalspaceasapprovedintheMarchNPCmeeting,i.e.toacceleratetheissuanceofspeciallocalgovernmentbondsinthecomingmonths.Onthemonetarypolicyfront,weexpecta10bpratecutanda25bpRRRcutlaterin3Q,withTSFgrowthstayingsoftat8.1%oyaatyear-end.Intheabsenceofmajorstructuralreformsfromthe3rdPlenum(tobeheldthisweek)andmeaningfulcounter-cyclicalpolicyadjustmentsinthepolitburomeetinglaterthismonth,theofficialfull-yearGDPgrowthtargetof“around5%”willriskamodestundershooting.

Hence,policyresponsesareimportanthere.TheJulypolitburomeeting(inlateJuly)willdecideonthepolicyguidelinesin2H,focuswillbewhetherthegovernmentwillincreasethefiscalandmonetarysupport(vs.ourforecast),whetherthecentralgovernmentwilluseitsfiscalspacetohelpmitigatefiscaldifficultiesbylocalgovernments(asProfessorBaifromTsinghuaUniversityrecommended,alump-sumof6-7trillionyuanfiscalsupportfromcentralgovernmenttocoverCOVID-relatedexpenditurebylocalgovernments),andwhethertherewillbeadditionalsupportivemeasurestoboostdomesticconsumptionandstabilizethehousingmarket.Fromthe3rdPlenum,thefocusiswhetherthegovernmentwillannouncereformmeasurestoliberalizeproductionfactors(e.g.landreformanddatamanagementinpromotingdigitaleconomy),identifynewsourcesofgrowth(innovationsandindustryupgradeinmanufacturingandservicesectors)andcontroltheweaklinks(e.g.housing,fiscalreform).

China:RealGDPgrowth

J.P.Morgan

%change

16

12

8

4

0

-4

-8

-12

%q/qsaar

%oya

forecast

18Q119Q120Q121Q122Q123Q124Q1

Source:NBS,J.P.Morgan

60

40

20

0

-20

-40

5

HaibinZhu(852)2800-7039haibin.zhu@

JPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002

grace.h.ng@

TingtingGe(852)2800-0143tingting.ge@

JiYan(852)2800-7673ji.yan@

AsiaPacificEconomicResearch

15July2024

China:monthlyindicators

2022

2023

Mar-24

Apr-24

May-24

Jun-24

Realindustrialproduction

%oya

3.6

4.5

4.5

6.7

5.6

5.3

%changecomparedtosameperiodin2019

28.6

24.8

25.0

29.6

m/m,sa(JPM)

-1.0

-0.4

0.4

1.1

m/m,sa(NBS)

-0.1

0.9

0.3

0.4

Fixedassetinvestment

Value

%oya,ytd

5.1

3.0

4.5

4.2

4.0

3.9

%oya

4.7

3.6

3.5

3.6

%changecomparedtosameperiodin2019

27.1

23.1

21.4

26.6

m/m,sa(JPM)

0.5

0.0

0.2

0.4

m/m,sa(NBS)

0.7

-0.1

0.0

0.2

RetailSales

Value

%oya

-0.2

7.2

3.1

2.3

3.7

2.0

%changecomparedtosameperiodin2019

24.3

17.2

19.1

19.4

m/m,sa(JPM)

-2.5

-1.1

1.5

-1.3

m/m,sa(NBS)

0.2

0.0

0.2

-0.1

Source:NBS,J.P.Morgan

Chinaindustrialproduction

%change,bothscales

80

60

40

20

0

-20

-40

%3m/3msaar

40

30

%oya

20

10

0

-10

-20

12131415161718192021222324

Source:NBS,J.P.Morgan

IPbreakdownbyproduct

%

40

Jan-JuneJune

30

20

10

0

-10

-20

Source:NBS,J.P.Morgan

China:Serviceproductionindex

%oya

35

30

25

20

15

10

5

0

-5

-10

-15

20172018201920202021202220232024

Source:NBS,J.P.Morgan

China:nominalfixedassetinvestmentgrowth

%,bothscales

40

%oya

%3m/3m,saar

30

20

10

0

-10

-20

-30

1112131415161718192021222324

Source:NBS,J.P.Morgan

120

90

60

30

0

-30

-60

-90

6

HaibinZhu(852)2800-7039haibin.zhu@

JPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002

grace.h.ng@

TingtingGe(852)2800-0143tingting.ge@

JiYan(852)2800-7673ji.yan@

AsiaPacificEconomicResearchChina

15July2024

FAIgrowthbyindustry

Realestate

%oya,ytd

Infrastructure

40

30

20

10

0

-10

-20

-30

Manufacturing

-40

12131415161718192021222324

Source:NBS,J.P.Morgan

FAIgrowth:Publicvsprivatesectors

%oya,ytd

40

Public

Total

Private

30

20

10

0

-10

-20

-30

12131415161718192021222324

Source:NBS,J.P.Morgan

China:Privateinvestment

70

60

50

40

30

20

10

0

-10

-20

-30

-40

-50

%oya,ytd

AggregateManufacturing

InfrastructureServices

30-

20-

0-10-

10

-20

202220232024

Source:CEIC,NBS,J.P.Morgan."Services"includeeducation,health,sports,entertainment,publicadministration,socialsecurityandothersocialworks.

Commoditybuildingfloorspaceandrealestateinvestment

%oya,3mma

Floorspace

sold

Realestateinvestment

Floorspacestarted

1112131415161718192021222324

Source:NBS,J.P.Morgan

China:FAIbyindustry

22Jun23Jun24Jun

%oya

40

30

20

10

0

-10

Mining

EnvHCEntITTSREAuto

-20

Note:Env=Environment;HC=Healthcare;Ent=Entertainment;

IT=Informationtechnology;TS=Transportation/Storage;RE=Realestate

Source:NBS;J.P.Morgan

Retailsales:goodsvs.catering/restaurantspending

%oya,3mma

80

60

40

20

0

-20

-40

Retailsales-catering/

restaurantspending

goods

Headlineretailsales

Retailsales-

201920202021202220232024

Source:NBS,J.P.Morgan

China:retailsales

%oya,3mmaRetailsales

ex.auto

Total

80-60-40-

20e

0--20--40-

Autosalesvalue

201320142015201620172018201920202021202220232024

-10

Source:NBS,J.P.Morgan

Retailsalesgrowthbreakdown

15

10

5

0

-5

%

Jan-JuneJune

Source:NBS,J.P.Morgan

7

HaibinZhu(852)2800-7039haibin.zhu@

JPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002

grace.h.ng@

TingtingGe(852)2800-0143tingting.ge@

JiYan(852)2800-7673ji.yan@

AsiaPacificEconomicResearch

15July2024

China:Unemploymentrates

Surveyunemploymentrate

31city(LHS)

%,bothscales

5.04.84.64.44.24.03.83.6

Urban(LHS)

SurveyunemploymentrateIl

Registereduneploymentrate(RHS)/

7.06.56.05.55.04.54.0

101112131415161718192021222324

Source:MHRSS,NBS,J.P.Morgan

Chinahouseholdssavingrate

%sa,bothscales

Urban

Rural

Total

41

.⃞

39

37

35

33

31

29

27

161718192021222324

Source:NBS,J.P.Morgan

22

20

18

16

14

12

10

Chinafixedassetsinvestmentbyindustry

%oya,ytd

%share(2023)

Mar-24

Apr-24

May-24

Jun-24

Totalfixedinvestment

100.0

4.5

4.2

4.0

3.9

Manufacturing

34.2

9.9

9.7

9.6

9.5

Infrastructure

21.7

6.5

6.0

5.7

5.4

-Transportinfrastructure

10.1

7.9

8.2

7.1

6.6

-Waterconservation,environmentmanag.

11.6

0.3

-1.0

-1.5

0.7

Realestate

13.5

-9.5

-9.8

-10.1

-10.1

Source:NBS,J.P.Morgan

Retailsalesvaluegrowth(%oya,ytd)

%share(2023)

Mar-24

Apr-24

May-24

Jun-24

Overall

100.0

4.7

4.1

4.1

3.7

AboveDesignatedSizeEnterpriseConsumerstaplegoods

4.9

4.0

3.9

2.9

Garments/footwear

8.5

2.5

1.5

2.0

1.3

Daily-useitems

4.6

0.7

1.5

2.7

2.3

Consumerdurablegoods

Furniture

0.9

3.0

2.5

3.0

2.6

Constructionmaterials

0.9

2.4

0.6

-0.4

-1.2

Automobiles

29.4

3.8

1.4

0.2

-1.1

Householdelectronics

5.3

5.8

5.5

7.0

3.1

Luxuryconsumergoods

Cosmetics

2.5

3.4

2.1

5.4

1.0

Jewelry

2.0

4.5

3.6

0.9

0.2

Source:NBSpressrelease

8

HaibinZhu(852)2800-7039haibin.zhu@

JPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002

grace.h.ng@

TingtingGe(852)2800-0143tingting.ge@

JiYan(852)2800-7673ji.yan@

AsiaPacificEconomicResearchChina

15July2024

Disclosures

AnalystCertification:TheResearchAnalyst(s)denotedbyan“AC”onthecoverofthisreportcertifies(or,wheremultipleResearchAnalystsareprimarilyresponsibleforthisreport,theResearchAnalystdenotedbyan“AC”onthecoverorwithinthedocumentindividuallycertifies,withrespecttoeachsecurityorissuerthattheResearchAnalystcoversinthisresearch)that:(1)alloftheviewsexpressedinthisreport

accuratelyreflecttheResearchAnalyst’spersonalviewsaboutanyandallofthesubjectsecuritiesorissuers;and(2)nopartofanyofthe

ResearchAnalyst'scompensationwas,is,orwillbedirectlyorindirectlyrelatedtothespecificrecommendationsorviewsexpressedbythe

ResearchAnalyst(s)inthisreport.ForallKorea-basedResearchAnalystslistedonthefrontcover,ifapplicable,theyalsocertify,asperKOFIA

requirements,thattheResearchAnalyst’sanalysiswasmadeingoodfaithandthattheviewsreflecttheResearchAnalyst’sownopinion,withoutundueinfluenceorintervention.

AllauthorsnamedwithinthisreportareResearchAnalystswhoproduceindependentresearchunlessotherwisespecified.InEurope,SectorSpecialists(SalesandTrading)maybeshownonthisreportascontactsbutarenotauthorsofthereportorpartoftheResearchDepartment.

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ExplanationofEmergingMarketsSovereignResearchRatingsSystemandValuation&Methodology:

RatingsSystem:J.P.MorganusesthefollowingissuerportfolioweightingsforEmergingMarketsSovereignResearch:Overweight(overthenextthreemonths,therecommendedriskpositionisexpectedtooutperformtherelevantindex,sector,orbenchmarkcreditreturns);

Marketweight(overthenextthreemonths,therecommendedriskpositionisexpectedtoperforminlinewiththerelevantindex,sector,or

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relevantindex,sector,orbenchmarkcreditreturns).NRisNotRated.Inthiscase,J.P.Morganhasremovedtheratingforthissecuritybecauseofeitherlegal,regulatoryorpolicyreasonsorbecauseoflackofasufficientfundamentalbasis.Thepreviousratingnolongershouldbereliedupon.AnNRdesignationisnotarecommendationorarating.NCisNotCovered.AnNCdesignationisnotaratingorarecommendation.

Recommendationswillbeattheissuerlevel,andanissuerrecommendationappliestoalloftheindex-eligiblebondsatthesamelevelfortheissuer.Whenwechangetheissuer-levelrating,wearechangingtheratingforalloftheissuescovered,unlessotherwisespecified.Ratingsforquasi-sovereignissuersintheEMBIGmaydifferfromtheratingsprovidedinEMcorporatecoverage.

Valuation&Methodology:ForJ.P.Morgan'sEmergingMarketsSovereignResearch,weassignaratingtoeachsovereignissuer(Overweight,MarketweightorUnderweight)basedonourviewofwhetherthecombinationoftheissuer’sfundamentals,markettechnicals,andtherelativevalueofitssecuritieswillcauseittooutperform,performinlinewith,orunderperformthecreditreturnsoftheEMBIGDindexoverthenext

threemonths.Ourviewofanissuer’sfundamentalsincludesouropinionofwhethertheissuerisbecomingmoreorlessabletoserviceitsdebtobligationswhentheybecomedueandpayable,aswellaswhetheritswillingnesstoservicedebtobligationsisincreasingordecreasing.

J.P.MorganEmergingMarketsSovereignResearchRatingsDistribution,asofJuly6,2024

Overweight

(buy)

Marketweight

(hold)

Underweight

(sell)

GlobalSovereignResearchUniverse*

11%

79%

11%

IBclients**

29%

48%

86%

*Pleasenotethatthepercentagesmaynotaddto100%becauseofrounding.

**Percentageofsubjectissuerswithineachofthe"Overweight,"Marketweight"and"Underweight"categoriesforwhichJ.P.Morganhasprovidedinvestmentbankingserviceswithintheprevious12months.

ForpurposesofFINRAratingsdistributionrulesonly,ourOverweightratingfallsintoabuyratingcategory;ourMarketweightrating

fallsintoaholdratingcategory;andourUnderweightratingfallsintoasellratingcategory.TheEmergingMarketsSovereign

ResearchRatingDistributionisattheissuerlevel.IssuerswithanNRoranNCdesignationarenotincludedinthetableabove.Thisinformationiscurrentasoftheendofthemostrecentcalendarquarter.

Analysts'Compensation:Theresearchanalystsresponsibleforthepreparationofthisreportreceivecompensationbaseduponvariousfactors,includingthequalityandaccuracyofresearch,clientfeedback,competitivefactors,andoverallfirmrevenues.

Registrationofnon-USAnalysts:Unlessotherwisenoted,thenon-USanalystslistedonthefrontofthisreportareemployeesofnon-US

affiliatesofJ.P.MorganSecuritiesLLC,maynotberegisteredasresearchanalystsunderFINRArules,maynotbeassociatedpersonsofJ.P.MorganSecuritiesLLC,andmaynotbesubjecttoFINRARule2241or2242restrictionsoncommunicationswithcoveredcompanies,publicappearances,andtradingsecuritiesheldbyaresearchanalystaccount.

9

HaibinZhu(852)2800-7039haibin.zhu@

JPMorganChaseBank,N.A.,HongKongBranchGraceNg(852)2800-7002

grace.h.ng@

TingtingGe(852)2800-0143tingting.ge@

JiYan(852)2800-7673ji.yan@

AsiaPacificEconomicResearch

15July2024

OtherDisclosures