Investment Daily. Market Overview. 21 March The Hang Seng Index is expected to trade at 20,500 to 20,900 today. Technical Analysis

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1 21 March 2016 Major Market Indicators Mkt. Turn.(mn) 92,800 70,700 58,700 Stock Advances 1,048 1, Stock Declines HSI 20,671 20,503 20,257 Change HSI Turn.($bn) HSCEI 8,883 8,773 8,571 Change HSCEI Turn.($bn) HSI Technical Indicators 10-days MA 20, days MA 19, days MA 23, days RSI Primary resistance 21,000 Primary support 19,934 HSCEI Technical Indicators 10-days MA 8, days MA 8, days MA 10, days RSI Primary resistance 9,141 Primary support 8,575 HSI Futures Mar 20,595 20,474 20,306 Volume 107, , ,806 Open interests 108, , ,262 Apr 20,582 20,467 20,286 Volume 2,778 3,258 1,200 Open interests 6,581 6,963 5,292 Market Overview The Hang Seng Index is expected to trade at 20,500 to 20,900 today Global stock markets continued its recent rally on Friday. The sentiment of Hong Kong and China stock market improved, Hang Seng Index closed at 20,672 points, increasing 168 points. HSCEI closed at 8,883 points, gaining 109 points. Turnover was $92.8 billion. The full year result of CK Property (1113) disappointed investors, the stock price slumped 2.4%. Gambling stocks took the lead of the market, Galaxy Ent (27) and Sands China (1928) rose 9.6% and 7.1% respectively. Buying interests on the healthcare and financial stocks helped the US stock market to continue its rally last Friday. The Dow and the Nasdaq rose 121 points (to 17,602) and 21 points (to 4,796) respectively. In fact, US stock market has already notch a fifth straight week of gains. Looking ahead this week, there are not much major economic data and events to be released. Investors will eye on PMI data of Eurozone to be released on Tuesday. US dollar turned weak, global stock market continued to perform well. Together with rebound of USD and HKD, HK market also performed well recently. Since local blue chips continued to perform well in the US ADR market last Friday, HK market is likely to open higher today. However, 21,000 is a major resistance level for Hang Seng Index, investors should aware of the potential profit taking pressure. Technical Analysis Currently Hang Seng Index s 14-day RSI is located above 60, which was the RSI peak in the last rebounding wave. Adding that the index has been rebounding over 10% from the trough of the declining wave, the upside potential for the index may become smaller. However, the turnover isn t low, and MACD bullish gap doesn t largely shrink. In addition, the Bollinger Band is rising. It s not appropriate to look too bearish to the market. The first resistance is 21,000 points, and the next resistance is 21,400 points. In addition, the first support will be the middle of the Bollinger Band 19,934 points, and the next support is the bottom of the Band 18,961 points. HSI Chart HSCEI Futures Mar 8,839 8,768 8,581 Volume 78, ,708 79,145 Open interests 276, , ,260 Apr 8,845 8,775 8,586 Volume 4,468 5,845 4,662 Open interests 33,272 31,676 26,597 Sources:etnet

2 Daily Focus China Resources Beer (0291.HK): Net Profit Below Expectation China Resources Beer(0291.HK) FY15 continued business revenue rose 1% to Stock Info HK$34.8bn. Net profit rose 13.8% yoy to HK$831mn, but still 10% below market consensus. The earnings disappointment is mainly due to lowered beer sales in the second half of as well as packaging changes, resulted in lowered gross margin. Closed price Forward P/E (X) Dividend yield (%) It also helped the Group sales to achieve 1% growth. 52 week high Since mainland beer market sales shrank in 2015, the Group beer sales also dropped 1.3% yoy. Of which, Snow Beer accounted for 90% of the sales. However, thanks to improvement of product mix, its ASP rose 3.2%, helped to support overall turnover rise 1% yoy. 52 week low RSI The Group pointed out that, compared with overall China beer market sales volume dropped 6% yoy, China Resoruces Beer performance is already good. Besides, for the first two months of 2016, the Group achieved low single digit growth in both sales and ASP. Since mainland beer market has reached saturated stage, together with keen market competition, China Resources Beer future sales is likely to low single digit growth only. On the other hand, the Group announced to buy back 49% stake of Snow beer from SABmiller at huge discount price, will help to enhance its earnings per share 50-60%. However, owing to its disappointinng earnings results, most analysts has lowered its target price and earnings estimates. We expect its share price trading range at HK Dollar (change from previous estimate of HK Dollar). GAC (2238.HK) acquired 49% equity interest of GAC Gonow GAC (2238) announced on last Friday, it entered into the Share Transfer Agreement with the Gonow Holdings. GAC will acquire 49% equity interest of Stock Info GAC Gonow at the consideration of RMB262 million. Upon completion, GAC own 100% equity interest of target company. GAC Gonow was established in 2010 by the GAC and Gonow Holdings. Currently, it produces and sells pickups, SUV, multi-purpose light bus and minivan. However, the target company recorded sustained losses since establishment. In 2015, it lost RMB451 million while the operating income was RMB517 million, down by 50.7% yoy. Closed price 7.58 Forward P/E (X) 10.5 Dividend yield (%) week high week low RSI GAC said that it will upgrade the factory infrastructure of the target company and produce new types of sudans and SUV. It is estimated that the project investment is around RMB3.75 billion. Moreover, GAC is facing inadequacy of capacity, a second factory is urgently needed to solve the capacity bottleneck. We think that the acquisition is positive to the GAC. It may save more costs and time by upgrading the infrastructure, rather than building a new factory. Hence, the new capacity can operate with a shorter period of time. On the other hand, the target 21 March

3 company may adjust the product structure with the brand name of GAC in the automotive industry. It may improve the sales and financial performance of the target company. It is expected the acquisition will become the short-term catalyst of GAC, however, its projected P/E is 10.5x. It may limit the upside potential of the stock price March

4 Shanghai- Stock Connect Statistics Northbound Southbound RMB(bn) HKD(bn) Balance Balance as % of Quota Amount Top 10 Most Actively Traded Stocks (Northbound) Stock Name Stock code Buy Trades Sell Trades Turnover BANK OF BEIJING ,808, ,463, ,271,959 INDUSTRIAL BANK ,006, ,407, ,414,570 CITIC SECURITIES ,792,402 63,939, ,732,010 HUNDSUN TECHNOLOGIES ,028,564 41,754, ,782,629 ZHEJIANG CHINA COMMODITIES CITY ,134,783 4,158, ,293,703 PING AN INSURANCE ,180, ,806, ,987,374 CHIFENG JILONG GOLD MINING ,279, ,496, ,776,441 CHINA MINSHENG BANKING ,383,058 95,105, ,488,457 KWEICHOW MOUTAI ,541,641 66,211, ,753,441 CHINA MERCHANTS BANK ,024,602 71,643, ,668,428 Sources: HKEx Top 10 Most Actively Traded Stocks (Southbound) Stock Name Stock code Buy Trades (HKD Sell Trades (HKD) Turnover (HKD) TENCENT ,987,000 41,698, ,685,460 DIGITAL CHINA ,597,130 4,102, ,699,310 SINOPEC CORP ,209,000 66,766,500 81,975,500 CGS ,288,855 46,212,405 64,501,260 PETROCHINA 857 7,950,600 53,284,040 61,234,640 KINGSOFT ,104,460 7,889,456 57,993,916 HKEX ,380,130 39,857,220 54,237,350 NCI ,904,755 23,203,780 42,108,535 CHINAHONGQIAO ,020,085 9,887,323 40,907,408 CHINA OILFIELD ,392,720 18,475,620 38,868,340 Other Statistics Ten Most Actively Traded Stocks Stock Name Code Change Closed Price Turnover(Million) TENCENT % PING AN % CHINA MOBILE % CHINA LIFE % CCB % GALAXY ENT % HKEX % CK PROPERTY % SANDS CHINA LTD % ICBC % March

5 Ten Short sell Stocks Stock Name Code Short Sell Turnover Short Sell Ratio TENCENT HK 1.48B 8.19B 18.05% SANDS CHINA LTD HK M 1.07B 41.69% GALAXY ENT HK M 1.24B 30.00% CHINA MOBILE HK M 1.92B 18.12% CCB HK M 1.25B 22.34% CK PROPERTY HK M 1.14B 23.84% ICBC HK M 1.07B 22.24% AIA HK M M 27.29% CNOOC HK M M 23.48% SHK PPT HK M M 35.88% Source: AAStocks Economic Calendar Date Country Event Survey Prior Mon United States Feb Existing Home Sales 5,310,000 5,470,000 Japan Market closed: Vernal Equinox Day Henderson Land(12) China Rev Power (836) CSPC Pharma(1093) China Rev Land (1109) Haier Elec(1169)Annual Result Tue Shenzhen Int'l(152) Geely(175) Tingyi(322) Huaneng Power(902) Long Yuan(916) Hengan(1044) China Coal(1898) Mengniu(2319) China State Con (3311)Annual Result Wed United States Feb New Home Sales 510, ,000 Eurozone Mar Consumer Confidence China EB(165) TVB(511) Kerry Log(636) China Telecom(728) Petrochina(857) Anhui Conch(914) Citic Bank(998) AAC Tech (2018) China Life(2628) Wasion Group (3383) GEL-Poly Energy(3800) Citic Sec(6030)Annual Result Thur United States Feb Durable Goods Orders -2.5% 4.7% Initial Claims 265,000 Mar Markit US Manufacturing PMI Eurozone Mar Markit Eurozone Manufacturing PMI Citic(267) Conch Venture(586) CNOOC (883) Huadian Power(1071) BAIC Motor(1958) Greatwall Motor(2333) CGS(6881)Annual Result Fri United States, Market closed: Good Friday Japan Feb Natl CPI 0.3% 0.0% Sinopharm(1099) GAC Group(2238) CPIC(2601) Zijin(2899) CNBM(3323) Greentown (3900)Annual Result Disclaimer Some of KGI Asia Ltd. equity research and earnings estimates are available electronically on KGIEWORLD.COM. Please contact your KGI representative for information. The information and opinions in this report are those of KGI Asia Ltd. internal research activity. KGI Asia Ltd. does not make any representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. The information and opinions contained in this report are subject to change without any notice. No person accepts any liability whatsoever for any loss however arising from any use of this report or its contents. This report is not to be construed as an invitation or offer to buy or sell securities and/or to participate in any investment activity. This report is being supplied solely for informational purposes and may not be reproduced or published (in whole or in part) for any purpose without the prior written consent of KGI Asia Ltd.. Members of the KGI group and their affiliates may provide services to any companies and affiliates of such companies mentioned herein. Members of the KGI group, their affiliates and their directors, officers and employees may from time to time have a position in any securities mentioned herein March