Fed described the economy as "slow" and said employers remained reluctant to create jobs and Inflation "somewhat low.

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1 08 Nov 2010 UNITED STATES The ISM manufacturing index rose to 56.9 in October from 54.4 in September, led by growth in autos, computers and exported goods. The ISM non-manufacturing index rose to 54.3 from 53.2 in September. Fed announced a new round of quantitative easing measure to stimulate the economy. Fed will buy USD600billion in government bonds until June 2011, in order to further lowering borrowing costs for consumers and businesses. Including Treasury purchases from reinvesting proceeds of mortgage payments, the Fed will buy a total of $850 billion to $900 billion of securities through June. Fed described the economy as "slow" and said employers remained reluctant to create jobs and Inflation "somewhat low. Obama s party lost control in the House of Representatives, market responses is quite positive. Factory orders rose a seasonally adjusted 2.1% in September. A divided Congress is typically seen as bullish for stocks as it makes passing new laws harder and lessens uncertainty for business. Unemployment rate held steady at 9.6%. Payrolls grow by 151,000 in October. The total upward revisions of non-farm payroll added 110,000 jobs in August and September. Dow Jones Industrial Average 11, , % S&P 500 1, , % NASDAQ 2, , % EUROPE Germany factory orders unexpectedly dropped in Sept. The orders fell 4% from August because of the decrease of demand for investment goods in euro-area. FTSE 100 5, , % DAX 30 6, , % CAC 40 3, , % 1

2 HONG KONG & CHINA China s manufacturing expanded at the fastest pace in six months in October. China s PMI released by the logistics federation rose to 54.7 from 53.8 in September. PMI from HSBC Holdings Plc jumped to 54.8 from Chinese banking sector led the gain. China construction bank increased by per cent a week, China Industrial and Commercial Bank increased by 8.01 per cent a week. Goldman Sachs raised its 12-month target of Hang Seng Index to 29,000. Hang Seng Index 23, , % Hang Seng CEI 13, , % Shanghai A 3, , % Shenzhen A 1, , % EMERGING MARKETS India s central bank raised interest rate for a six time this year. The repurchase rate rose from 6% to 6.25% but the officer said the chance of further policy tightening in immediate future is relatively low. Brazilian economists raised year ended CPI forecast for 2010 and 2011 because of upbeat domestic demand. Rousseff won in the runoff election but market expected she will fail to cut fiscal deficit enough to bring interest rate down. Brazil s interest rate futures contract due in 2015 yields higher after the announcement of election result. Russia s services industries grew at the fastest pace since Jun. Business activity index rose to 55.6 in Oct from 51.5 in Sept. Brazil BOVESPA 70, , % India SENSEX 20, , % Russia RTS 1, , % MSCI Emerging Market Index 1, , % 2

3 ASIA PACIFIC The BoJ held the overnight call rate to between zero and 0.1%. Moreover, then bank said it would purchase JREITs, ETF and government debts as a measure to stimulate the economy. Bank of Indonesia kept benchmark rate unchanged at its historical low of 6.5% because of low inflation. Australian construction remained contracted in Oct, it is 5 consecutive month of home building being cautious since the interest rate increase restricted the demand for new dwellings. The Reserve Bank of Australia raised interest rate from 4.5% to 4.75% as the officer concerned on strong growth and inflation. Indonesia s GDP increased 5.8% in 3Q, however it is below market estimate of 6.35% Taiwan Weighted Index 8, , % Australia All Ordinaries 4, , % Nikkei 225 9, , % Korea KOSPI 1, , % Singapore Straits Times 3, , % Thailand SET , % Philippine Composite Index 4, , % Indonesia JCI 3, , % Malaysia KLCI 1, , % 3

4 COMMODITY Commodity sector reacted positively in light of QE2. Crude oil price was also led by fundamental issue like production expectation cut from Russia and Iraq. Gold 1, , % Oil % Copper % CURRENCY & FIXED INCOME US Treasury 10 Yr was inspired by the new round of bond purchases from QE2. The yield had dropped by 5%. UST % UST % EUR/ USD % USD/ JPY % GBP/ USD % USD/ CAD % AUD/ USD % WHAT S COMING UP? After the earning seasons and a series of important data and news last week, this week US have no important data released, market will focus on G20 meeting held on 11 to 12 November Market would like to know whether G20 could come up with a mechanism to defuse currency tensions. China will release a series of economic data this week. Market expect the CPI of October will increase to year high 4 per cent. MSCI World Index 1, , % 4

5 FUNDS WEEKLY TOP 5 CATEGORY (%) 1 weeks 1 month 3 months 6 months 1 year 3 years HKM Equity - Hong Kong HKM Equity - China HKM Equity - Asia Pacific ex Japan HKM Equity - Emerging Europe HKM Equity - Greater China FUNDS WEEKLY BOTTOM 5 CATEGORY (%) 1 weeks 1 month 3 months 6 months 1 year 3 years HKM Currency - USD/HKD HKM Hedge/Stru Product HKM Fixed Int - US Dollar HKM Fixed Int - Asia Pacific HKM Equity - Japan Small/Mid Cap ECONOMIC FIGURES RELEASE Date Country Event Estimate Previous 8 Nov Germany Sep Industrial Production (y.o.y.) 9.5% 10.7% EMU Nov Investor Sentiment Index Nov UK Sep Industrial Production (y.o.y.) 3.5% 4.2% UK Sep Manufacturing Output (y.o.y.) 4.9% 6% US Sep Wholesale Inventories (m.o.m.) 0.7% 0.8% 10 Nov France Sep Industrial Production (y.o.y.) 4.7% 3.2% 11 Nov China Oct CPI (y.o.y.) 4.0% 3.6% China Oct Retail Sales (y.o.y.) 18.8% 18.8% China Oct Industrial Production (y.o.y.) 13.5% 13.3% 12 Nov Germany Q3 Preliminary GDP (y.o.y.) 3.7% 4.1% EMU Q3 Flash GDP (y.o.y.) 1.9% 1.9% EMU Sep Industrial Production (y.o.y.) 7.1% 7.9% US Nov Prelim Michigan Sentiment Index Source : Financial Express/ Financial Times 5

6 ALROY S VIEWS at a glance Country/ Region Commodity China Positive Gold Neutral Hong Kong Positive Crude Oil Positive Taiwan Neutral Agricultural Positive Japan Neutral Currency South Korea Neutral USD Positive Australia Neutral EUR Positive US Neutral GBP Neutral Western Europe Neutral JPY Positive Eastern Europe Positive AUD Neutral Russia India Brazil Positive Neutral Neutral COMMENTS The long awaiting QE2 had been announced but did not give much surprise to markets. Emerging equity and commodity markets were boosted by the expectation of affluent liquidity but we remained cautious in short term due to receiving overbought signals from various technical indicators. Some financial institutes started to release their outlook next year. They predict that emerging market will demonstrate Super Goldilocks economies. Basically, we agree their views but cherry picking should be applied since those economies are going to have different rate cycle or administrative measures to handle excessive capital from QE2. There are 3 ratings: Positive, Neutral and Negative Positive: Expected performance will exceed benchmark performance in coming 6 to 12 months. Neutral: Expected performance will meet the benchmark performance in coming 6 to 12 months. Negative: Expected performance will below benchmark performance in coming 6 to 12 months. The information shown in this article is neither a recommendation, an offer, nor a solicitation for any investment products or services. Investment involves risk. Past performance is not necessarily a guide to future performance. The value of investments and income from them can fluctuate and is not guaranteed. Rates of exchange may cause the value of investment to go up or down. Investors may not get back the amount they invest. Individual stock price/figure does not represent the return of the investment products. Issuer of this sales material: Patrick Lam, Alroy Financial Services Ltd 6