HSI regained the 23,000 level after Dow hit record highs

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1 9/F, 10 Des Voeux Road Central, Hong Kong. Dealing: Research: Facsimile: HONG KONG RESEARCH Restricted circulation Weekly Report Analyst: Kelvin Li 8 th March 2013 Turnover (HK$ bn) ,880 HSI regained the 23,000 level after Dow hit record highs HSI Weekly Movement 22,778 22,771 22,538 22,561 23, Mar Mon Tue Wed Thu Fri Turnover Hang Seng Index 24,000 23,500 23,000 22,500 22,000 21,500 21,000 20,500 20,000 Hang Seng Index Weekly Market Statistics Week ended 08/3/ /3/2013 Change % Hang Seng Index 23,092 22, % HS Red Chip Index 4,559 4, % HS China Enterprises Index 11,484 11, % HS Hong Kong 35 Index 2,656 2, % HS Mainland 100 Index 6,883 6, % Growth Enterprise Index % Avg Daily Turnover % (HK$ bn ) Sectoral Indices Finance 32,606 32, % Utilities 55,018 54, % Properties 31,698 32, % Comm & Ind 12,931 12, % Review & Outlook of Market Performance The National People s Congress (NPC), China s annual parliament session, started on Tuesday, when Premier Wen delivered his final government work report. Target of GDP growth and CPI inflation of 2013 were set at 7.5% and 3.5%, respectively, compared with 7.8% and 2.6% in Transition of power from President Hu to Xi Jinping will also be confirmed during the annual meeting. Over the week, the Hang Seng Index rose points or 0.9% to 23,091.95, while the HSCEI surged 1.2%. Daily average Mainboard turnover was HK$73.2 billion, up slightly from HK$71.1 billion in the previous week. During the week, Hong Kong stocks staged a V-shaped rebound. The HSI lost more than 350 points on Monday, after the State Council surprised the market by introducing a fresh round of measures to cool down the property sector before the annual NPC. The cooling measures included strict enforcement of capital gain tax of 20% and a higher down-payment for second homes, which triggered a sell-off in PRC property developers. The local bourse gradually picked up steam, as market sentiment improved after Dow Jones hit record highs in a five-day wining streak on hope of better employment and corporate earnings in the US. Strong February exports data in China helped the HSI moved up further and regained ground above 23,000 on Friday. On the stock front, shipping related plays and exporters were among the winners following the strong Chinese exports data, while PRC property developers and cement producers headed south on policy hit. Meanwhile, the newly listed Petro-king was under spotlight, as it posted a strong gain of 26.8% in its trading debut. The 1000-times oversubscribed Oi Wah Pawnshop and auto parts maker Xichen will have their trading debut on next Tuesday and Wednesday, respectively. China will release February CPI data on Saturday (9 th Mar), which is expected to surge 3.0% on rising food prices during Lunar New Year. Investors will also keep eyes on the US Feb payrolls report due on Friday (8 th Mar). The Hang Seng Index may see breakthrough from the recent trading range of 22,500-23,100 should the two economic reports delivered positive surprise. This report has been prepared solely for information purposes and we, East Asia Securities Company Limited are not soliciting any action based upon it. Neither this document nor its contents shall be construed as an offer, invitation, advertisement, inducement or representation of any kind or form whatsoever. This document is based upon information, which we consider reliable, but accuracy and completeness are not guaranteed. Opinions expressed herein are subject to change without notice. At the time of preparing this report, we have no position in securities of the company or companies mentioned herein, while other Bank of East Asia Group companies may from time to time have interests in securities of the company or companies mentioned herein.

2 US & Regional Markets Weekly Update Date US US JAPAN SINGAPORE MALAYSIA BANGKOK TAIPEI Dow Jones NASDAQ Nikkei Avg STI KLSE Index SET Index Weighted Index 8th March 14,329.49* 3,232.09* 12, , , , , st March 14, , , , , , , Change % +1.7% +2.0% +5.8% +0.6% +1.0% +1.8% +0.6% Remark: (*) closing at of 7 th March 2013 Major Changes in Index Constituent s (Week ended 8 th March 2013) Hang Seng Index (HSI) Want Want China HK$ HK$ % Want Want China was the top gainer in the blue-chip index, after the rice-cake maker reported a strong 32% net profit growth in 2012, supported by dairy and beverage sales and better profit margin on a good product mix. Hang Seng China Enterprises Index (HSCEI) China Longyuan Power China Merchants Bank HK$6.91 -HK$ % An investor placed 120 million H shares of China Longyuan Power at HK$6.91- HK$7.02 each for more than HK$800 million. In fact, most PRC power producers fell, as profit taking emerged following their respective strong performance in the previous week HK$ HK$ % China Merchants Bank said its 2012 net profit grew 25% from a year earlier, based on preliminary financial data. Hang Seng China-Affiliated Corporations Index (HSCCI) China Overseas Land China Resources Land HK$ HK$ % HK$ HK$ % Poly Property HK$5.04 -HK$ % The PRC property developers were among the losers, after the State Council surprised the market by announcing a fresh set of cooling measures for the red-hot property market in China before the National People s Congress. 2

3 Summary of US Economic News Indicator Change/Index Comments ISM non-manufacturing index February Growth in the US services sector speeded up, as the ISM non-manufacturing index surged to 56.0 in Feb from 55.2 in Jan, higher than market expectation of Factory orders January 2013 Initial jobless claims week ended 2 nd March 2013 Trade balance January % -7,000 Deficit of US$44.4 billion Factory orders fell 2.0% in Jan, dragged by lower transportation orders. Excluding the volatile orders for transportation equipment, factory orders grew 1.3%. Initial jobless claims dropped 7,000 to 340,000, beating consensus forecast of 355,000. Trade deficit amounted to US$44.4 billion in Jan, widened from a US$38.1 billion deficit in Dec 2012 and higher than market expectation of US$42.6 billion, owing to a 1.2% drop in exports. Major Earnings Results Announcements During the Week Chong Hing Bank (01111) Hang Seng Bank (00011) HSBC Holdings (00005) Hysan Development (00014) Power Assets (00006) Standard Chartered (02888) Want Want China (00151) Wing Hang Bank (00302) Net profit HK$543.3 million y-o-y change -3.1% HK$19.4 billion +15.0% US$14.0 billion -16.5% HK$10.0 billion +16.5% HK$9.7 billion +7.2% US$4.79 billion +0.8% US$553.8 million +32.0% HK$1.8 billion -16.1% Drivers of performance Chong Hing Bank reported a mild dip in 2012 earnings, dragged by lower fee and commission income. Hang Seng Bank posted a 15% profit growth in 2012, driven by disposal gain of its general insurance business and contribution from Industrial Bank. The banking giant reported worse-thanexpected earnings in 2012, owing to compliance-related charges and fairvalue loss of its own debts. Hysan s underlying profit grew by a strong 23.8% last year, thanks to contribution from the newly operated Hysan Place. Power Assets 2012 earnings grew by 7%, thanks to better contribution from its UK operation. StandChart s managed to report flat earnings growth in 2012 even with higher impairment and provision charges. Want Want s earnings rose by a robust 32% y-o-y in 2012, driven by strong sales of dairy and beverage products as well as better profit margins on good product mix. Wing Hang Bank reported lower earnings in 2012, owing to dropping net interest income and higher loan impairment charges. Share price w-o-w chg +9.6% +3.0% -0.4% -0.1% +3.8% -0.6% +10.4% -5.1% 3

4 Forthcoming Important Announcements / Events 11 th March 2013 (Monday) 12 th March 2013 (Tuesday) 13 th March 2013 (Wednesday) 14 th March 2013 (Thursday) 15 th March 2013 (Friday) HK : China Silver Group (00815) final results Harbour Centre (00051) final results Mongolian Mining Corp (00975) final results MTR Corporation (00066) final results Northeast Electric (00042) final results Peak Sport (01968) final results US : No important announcement/event HK : Oi Wah Pawnshop Credit (01319) trading debut Ajinsen (China) (00538) final results Andre Juice (02218) final results Dragon Crown (00935) final results HAECO (00044) final results IRC (01029) final results Sino-Ocean Land (03377) final results US : No important announcement/event HK : Xinchen China Power (01148) trading debut Cathay Pacific Airways (00293) final results China Lilang (01234) final results China Resources Gas (01193) final results Hong Kong & Shanghai Hotels (00045) final results Pheonix TV (02008) final results Prudential PLC (02378) final results Springland (01700) final results Value Partners (00806) final results Yuexiu REIT (00405) final results US : Retail sales February 2013 HK : China Aluminum International Engineering (02068) final results China Mobile (00941) final results China Molybdenum (03993) final results GCL-Poly Energy (03800) final results Guotai Junan International (01788) final results Kerry Properties (00683) final results Ping An Insurance (02318) final results Swire Pacific (00019) final results Swire Properties (01972) final results US : Initial jobless claims week ended 9 th March 2013 Producer price index February 2013 HK : Anton Oilfield Services (03337) final results Beijing Media (01000) final results Besunyen (00926) final results China Coal Energy (01898) final results China Resources Land (01109) final results Midland (01200) final results Sands China (01928) final results Sateri (01768) final results Shanghai Prime Machinery (02345) final results Sunart Retail (06808) final results Towngas China (01083) final results Weiqiao Textile (02698) final results Xtep (01368) final results US : Consumer price index February 2013 Industrial production February 2013 Consumer sentiment March

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