Analyst: Kelvin Li 4 th March ,000 23,500 23,000 22,500 22,000 21,500 21,000

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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 4 th March 2011 Turnover (HK$ bn) ,012 HSI Weekly Movement 23,338 23, ,049 23,122 23, Feb Mon Tue Wed Thu Fri Turnover Hang Seng Index 24,000 23,500 23,000 22,500 22,000 21,500 21,000 Hang Seng Index Weekly Market Statistics Week ended 04/3/ /2/2011 Change % Hang Seng Index 23,409 23, % HS Red Chip Index 4,106 3, % HS China Enterprises Index 12,850 12, % HS Hong Kong 35 Index 2,568 2, % HS Mainland 100 Index 7,203 6, % Growth Enterprise Index % Avg Daily Turnover % (HK$ bn ) Sectoral Indices Finance 34,328 34, % Utilities 41,615 41, % Properties 29,354 28, % Comm & Ind 13,347 12, % Review & Outlook of Market Performance The Hong Kong stock market experienced a bumpy ride amid political unrest in Libya. Eased tightening worries on a drop in China s Feb PMI set a good start at the HSI, but a jump in crude oil prices over US$100 per barrel gave a big hit on Wed. The HSI staged a late rebound on Fri, as investors hoped for a decent February payrolls report from the US after initial jobless claims fell to a two-and-a-half year low last week. Over the week, the HSI gained 396 points or 1.7% to 23,408.86, while the HSCEI jumped 4.7%. The daily average Mainboard turnover amounted to HK$76.7, up from HK$68.3 in the previous week. In the territory, the HK government s rare decision to make big adjustments in the Budget also drew market attention. Financial Secretary Tsang said the government will pay every HK permanent citizen a cash grant of HK$6,000 and offer 75% salary tax rebate capped at HK$6,000. The change was made following unprecedented public criticism over huge fiscal surplus but lack of relief measures as well as failure to address rocket-high property prices. Economists also questioned the cash grant measures, as it would add deep inflationary pressure. Several big blue-chip names released their 2010 earnings results during the week. HSBC said its net profit jumped by over 1.2x in 2010, but the stock was under pressure after its management cut its ROE target. CITIC Pacific s 2010 earnings was much better than expected, thanks to strong performance in its special steel segment, gains from non-core asset disposal and property revaluation. For the coming week, the HSI is expected trade higher between 23,500-24,000 amid bargain hunting in China plays before their earnings results. *The local bourse will have new trading hours starting next Monday (Mar 7). Details is as follows: Pre-opening session of the securities market 9:00-9:30am, Morning session 9:30-12:00am and Afternoon session 1:30-4:00pm. 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 4th March 12,258.20* 2,798.74* 10, , , , th February 12, , , , , , Change % +1.1% +0.6% +1.6% +1.2% +2.2% +1.1% +2.1% Remarks: (*) closing at of 3 rd March Major Changes in Index Constituent s (Week ended 4 th March 2011) Hang Seng Index (HSI) HSBC Holdings HK$ HK$ % HSBC was the biggest loser in the HSI during this week, after the banking giant revised down its ROE target to 12%- 15% from the previous 15%-18% on higher costs on tighter regulatory requirement. Hang Seng China Enterprises Index (HSCEI) Aluminum Corporation of China (Chalco) HK$7.40 -HK$ % Chalco reported a net profit of RMB778 million in 2010, reversing a loss of RMB4.6 in However, it missed consensus forecast of RMB967 million, owing to higher cost pressure. Hang Seng China-Affiliated Corporations Index (HSCCI) China Resources Cement HK$6.62 +HK$ % Cement plays were among the winners during the week, after Premier Wen said to push forward construction of 36 million social security housing units during the 12 th Five-year plan, which is expected to boost demand for cement in the coming years. 2

3 Summary of US Economic News Indicator Change/Index Comments Personal income January 2011 Construction spending January 2011 ISM manufacturing index February 2011 Initial jobless claims week ended 26 th Feb 2011 Productivity (revised) Q ISM non-manufacturing index February % -0.7% , % 59.7 Personal income rose 1.0% in Jan after a 0.4% rise in Dec, beating forecast of 0.3%. Economists said the rise was mainly driven by a 2% payroll tax cut. Personal spending, however, rose a weaker-thanexpected 0.2% in Jan, after a 0.5% rise in Dec. Construction spending fell 0.7% in Jan, weaker than expectations of a 0.6% drop. ISM manufacturing index surged to 61.4 in Feb from 60.8 in Jan, marking the highest since May Initial jobless claims fell 20,000 to 368,000, the lowest since May Productivity grew at an annual rate of 2.6% in 4Q10. For the full year of 2010, productivity rose 3.9%. ISM non-manufacturing index surged to 59.7 in Feb from 59.4 in Jan, which showed growth in the US services sector stayed solid. Major Earnings Results Announcements During the Week HSBC Holdings (00005) Power Assets (00006) Hang Seng Bank (00011) Sun Hung Kai Properties (00016) New World Development (00017) MTR Corp (00066) CITIC Pacific (00267) Hong Kong Exchanges & Clearing (00388) Aluminum Corp of China (02600) Net profit US$13.2 HK$7.2 HK$14.9 HK$21.0 HK$4.4 HK$12.1 HK$8.9 HK$5.0 RMB778 million y-o-y change +126% +7.4% +13.5% +36.1% -24.1% +25.1% +49.8% +7% % Drivers of performance HSBC saw a sharp rebound in 2010 net profit, thanks to a 47% drop in loan impairment. Power Assets, formerly known as Hongkong Electric, posted a steady earnings rise of 7.4% in 2010, led by new contribution from its overseas operations. HSB reported a 13.5% y-o-y rise in 2010 net profit on strong loan growth. SHKP a solid rise in interim profit, supported by robust sales from its Larvotto residential project. NWD s interim earnings fell owing to lower property revaluation gain. Excluding the item, its underlying profit grew 30% y-o-y. MTRC posted a solid profit growth in 2010, thanks to robust property development profit and higher contribution from overseas operation. CITIC Pacific posted a 50% profit rise in 2010, supported by better earnings in its special steel segment, gain from non-core asset sale and property revaluation. HKEx posted a 7% rise in net profit last year, supported by a 11% y-o-y rise in average market turnover. Chalco revived from loss of RMB4.6 in 2009 and returned to profit in 2010 on better product prices. Share price w-o-w chg -5.78% -0.58% +0.96% +2.01% +3.18% +1.93% +7.97% +2.73% -0.67% Standard Chartered (02888) US$ % StanChart s net profit jumped in 2010 on lower loan impairment % 3

4 Forthcoming Important Announcements / Events 7 th March 2011 (Monday) 8 th March 2011 (Tuesday) 9 th March 2011 (Wednesday) 10 th March 2011 (Thursday) 11 th March 2011 (Friday) HK : Kingboard Chemical (00148) final results SPG Land (00337) final results International Taifeng (00873) final results Winsway Coking Coal (01733) final results Kingboard Laminates (01888) final results HK : Hong Kong Aircraft Engineering Co (00044) final results Lee Hing Development (00068) final results Want Want China (00151) final results China WindPower (00182) final results China Chengtong Development (00217) final results Fubon Bank (Hong Kong) (00636) final results Changfeng Axle (01039) final results China Rongsheng Heavy Industries (01101) final results Phoenix Satellite Television (02008) final results HK : Hysan Development (00014) final results Harbour Centre Development (00051) final results China Agri-Products Exchange (00149) final results Cathay Pacific Airways (00293) final results Sun Innovation (00547) final results Singamas Container (00716) final results Lianhua Supermarket (00980) final results MIE Holdings (01555) final results Guotai Junan International (01788) final results China Communications Construction (01800) final results Prudential plc (02378) final results Advanced Semiconductor (03355) final results HK : Swire Pacific (00019) final results AVIC International (00232) final results Real Gold Mining (00246) final results Sino Gas (00260) final results Wing Hang Bank (00302) final results Sinotrans Shipping (00368) final results GZI REIT (00405) final results Shanghai Zendai Property (00755) final results Automated Systems (00771) final results Value Partners (00806) final results Pearl River Tyre (01187) final results China New Town Development (01278) final results SITC International (01308) final results Kaisa Group (01638) final results KWG Property (01813) final results Yorkey Optical (02788) final results China Glass (03300) final results US : Initial jobless claims the week ended 5 th March 2011 HK Trade balance January 2011 : Shenyin Wanguo (00218) final results San Miguel Brewery Hong Kong (00236) final results Orient Overseas (00316) final results Tan Chong International (00693) final results Besunyen (00926) final results Anhui Expressway (00995) final results HL Technology (01087) final results US : Retail sales February 2011 Consumer sentiments March

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