Nomura released a research report stating that stimulus policies, localization, and artificial intelligence investments will support the recovery of China National Software & Service industry from the second quarter of next year. The bank believes that due to strong sentiment towards government fiscal stimulus, the China software index has risen 76% in the past 60 days, reclaiming the lost ground of 2024. It is also believed that before information technology spending rebounds, it will take some time for economic stimulus plans to take effect. Recommend buying shares of Kingsoft (03888) and Kingdee Int'l (00268).
The report states that considering the weak seasonality of the first quarter of next year, if there are clear signs of macroeconomic recovery, Nomura believes that the fundamental recovery of the China National Software & Service industry may accelerate from the second quarter of 2025. The bank believes that domestic substitution and AI will be the two key drivers of this industry in 2025, with the former driven by external factors, namely geopolitical risks, and the latter driven by internal factors.
