2025.10.27 Dow Chemical Q3 2025 Earnings Report

The stock price has been depressed for a full year, falling two tiers; after the Q3 2025 earnings report, the share price surged 13%—has there been any fundamental change? ・First, revenue was weak: the Q2 guidance for this quarter stood at $10.2 billion. ・Second, GAAP EPS turned positive this quarter only due to two non-recurring items; operating profit failed to cover interest expenses. ・On the positive side, the loss was narrower than expected, indicating that the company’s cost-cutting and capital expenditure reduction efforts have borne fruit. Has the chemical industry reached its downward inflection point? ・On the supply side, Dow believes capacity restraint has begun across all regions—including China: “We've got speculation on the closures of about 13 million metric tons from a combination of additional capacity in Asia, Japan and Korea to the tune of about 5 million tons and China from the [anti-evolution] policies to the tune of about 7 million tons.” ・On the demand side, Dow views overall demand as still weak—with no change from last quarter. It hopes rate cuts will spur construction starts.

[Shopkeeper’s Observation] Central Authorities’ Economic Outlook for 2025: How Much Trillion-Yuan Stimulus Is Implicitly Expected?

Although it is difficult for us to reach the government debt-to-GDP ratios seen in Europe and the U.S., this very gap represents the available scope of our fiscal policy toolkit—and we retain enormous room for additional borrowing. Moreover, China possesses an exceptionally large stock of state-owned enterprise (SOE) and central SOE assets, which can serve as substantial collateral for further credit expansion. Reserve Requirement Ratio (RRR) and Interest Rate Cuts: How Many Trillions Will the PBOC Release in 2025? The meeting specifically emphasized implementing a moderately loose monetary policy, fully leveraging both the aggregate and structural functions of monetary policy tools—cutting the RRR and policy rates at appropriate times, maintaining ample liquidity, and ensuring that growth in social financing and money supply aligns with GDP growth and overall price-level targets. A ‘moderately loose’ monetary policy evokes memories of China’s post-2008 stimulus era—particularly the 2009–2010 period following the RMB 4-trillion package—suggesting that the central authorities’ commitment to economic recovery is at least comparable to, and likely exceeds, that of 2008. The Shopkeeper argues this is not merely a simple comparison against the RMB 4-trillion base figure, but rather a scaling relative to the GDP size at the time: the RMB 4 trillion represented roughly 12.7% of China’s then-RMB 31.4-trillion GDP. Applying the same proportion to the projected 2024 GDP of RMB 132 trillion implies a cumulative stimulus envelope of approximately RMB 16.81 trillion. Thus, the scale of stimulus should be robustly anticipated. Regarding RRR cuts: since 2024, the PBOC has lowered the RRR twice—in February and September—by a total of 1 percentage point, releasing around RMB 2 trillion in long-term liquidity. For 2025, major securities firms broadly expect further RRR cuts of 1–2 percentage points, i.e., an additional RMB 1–2 trillion in liquidity. According to an OECD Secretariat report released in October 2018, the average reserve requirement ratio among the 33 AFTC member economies stabilized between 4% and 7% in the 21st century, with 5% representing a critical threshold for statutory reserve requirements. In reality, China’s current weighted average RRR for financial institutions has already declined to 6.6%, nearing the 5% floor. Therefore, the Shopkeeper judges a reasonable expectation to be a 1.5-percentage-point cut—i.e., RMB 1.5 trillion in additional liquidity. Regarding interest rate cuts: Hu Yifan, Chief Asia-Pacific Macro Economist at UBS Wealth Management, expects PBOC rate cuts of 20–40 basis points; Shan Hui, Chief China Economist at Goldman Sachs, forecasts 40 bps; Morgan Stanley also predicts 40 bps; Citibank projects 50 bps; and Mizuho Securities anticipates a 60-bps cut. The Shopkeeper believes that, under the newly reaffirmed principle of ‘moderately loose’ policy—and consistent with broad market consensus—the baseline expectation for 2025 is a 40-bps cut, with a 50-bps cut fully plausible. Such a move would release roughly RMB 1 trillion in liquidity. Objectively speaking, China has already entered a low-interest-rate regime and will likely accept moderate inflation going forward. How Much Additional Liquidity for A-Shares Can the Central Bank Deliver? The meeting stated: “Explore and expand the central bank’s macroprudential and financial stability functions, innovate financial instruments, and safeguard financial market stability.” How should this be interpreted? It must be understood in conjunction with the central authorities’ explicit call to ‘stabilize the property market and stock market.’ Stabilizing the property and equity markets centers on stabilizing asset prices—and, fundamentally, expectations. Underlying this is also the indirect stabilization of employment and consumption.

Mizuho Cuts Dow Inc. Stock Target to USD 32.00

Oct 7, 2026

Mizuho lowered its price target for Dow Inc. to $32.00, citing concerns over Chinese exports impacting demand despite Q2 earnings beats. Investors await Q3 results as shares remain below 52-week highs.

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Mizuho cuts target for Dow stock from USD 35.00 to USD 32.00

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