9 June 2014

CFSG Daily Comment

Today’s Forecast Market Outlook HSI trading range 22,900 – 23,200 points Market focus Chinese property sector HSI might challenge 23,000 points today. The Hang Seng Index rebounded by 121 points to its intra-day high of 23,231 points at Greatwall Motor (02333) the opening last Friday amid the upbeat performance of European and U.S.’s stocks. Evergrande (03333) After that, dragged by the weak performance of Mainland ’s stocks, the gains of the index narrowed down and turned to a negative territory. During the afternoon session, HK and Regional Markets the losses of HK stocks once narrowed down. However, during the last trading hour, Close (last trading day) Up(down) HK market plunged again and the HSI finally closed near the intra-day low of 22,951 Hang Seng Index 22,951.00 (0.69%) points, down 158.66 points or 0.69%, losing 23,000 points level. Amongst, Chinese bank HSCEI 10,340.99 (0.23%) sector and gaming stocks tumbled in general. Market turnover rose to HKD56.4 billion, CCI 4,248.58 (0.58%) indicating HK market suffered selling pressure last Friday. The ADR proportional HSI DJIA 16,924.28 0.52% index closed overnight at 22,979 points with 28 points or 0.12% higher than last Friday’s Nasdaq 4,321.40 0.59% closing price. Coupled with the strong performance of the U.S. stock markets and the UK FTSE 6,858.21 0.66% better-than-expected Chinese exporting data, HSI is expected to breakthrough 23,000 France CAC 4,581.12 0.71% points today. On top of that, National Bureau of Statistics will announce the inflation rate Germany DAX 9,987.19 0.40% and industrial production related economic data on coming Tuesday. The results might Shanghai A 2,125.33 (0.54%) bring ripples on Hong Kong stock market later on. Thus, investors are advised to take an Shanghai B 223.53 0.00% eye on the relevant factors.

Hang Seng Composite Industry Indices Sector and Company News Close (last trading day) Up(down) Energy 11,731.32 0.11% ¢ Country Garden (02007)'s contracted sales in first five months were RMB49.37 billion; Materials 5,114.32 0.42% contracted sales GFA was approximately 7.588 million square meters. Consumer Goods 4,825.02 (0.32%) ¢ Goodbaby Intl (01086) acquired entire issued capital of a juvenile and infant durable Services 4,869.49 (0.90%) products manufacture WP Evenflo Group at a consideration of USD143 million. WP Telecommunications 1,630.93 (0.65%) Evenflo Group’s revenue for 2013 was HKD1.612 billion and recorded a loss of Financials 3,332.03 (0.44%) HKD59.9 million. Properties & Construction 2,820.24 (0.70%) ¢ Greatwall Motor (02333)’s car production in May dropped by 13.9% YoY to 53,538 Conglomerates 2,924.39 (1.47%) units and car sales fell by 15.7% YoY to 51,837 units. ¢ China Longyuan (00916)’s power generation in May rose by 8.68% YoY to 3.1882 HSI Futures (Day Trading Session) million MWh. Jun-14 Jul-14 ¢ Evergrande (03333)’s contracted sales in May were RMB11.82 billion and contracted Open (last trading day) 23,126 23,018 sales area was approximately 1.866 million square meters, up 28.3% and 45.1% YoY Close (last trading day) 22,790 22,691 respectively. Up (down) -195 -194 ¢ According to figures released by General Administration of Customs, China’s total Day High 23,134 23,018 value of imports and exports in May increased by 3% YoY to USD355.02 billion. Day Low 22,782 22,686 Amongst, exports climbed by 7% YoY to USD195.47 billion, beating market Settled volume 55,151 818 expectation of a 6.6% growth; dragged by the weak domestic demand, imports slipped Change in OI -1,862 276 by 1.6% YoY to USD159.55 billion, much worse than the market expectation of a growth 6.6%.

Foreign Exchange Latest Price Stock Pick USD/JPY 102.5900 EUR/USD 1.3648 GAC Group (02238)’s car sales in May rose by 27.3% YoY. GBP/USD 1.6808 ¢ Recently, GAC Group announced that the Group’s car production in May hiked by AUD/USD 0.9341 USD/CAD 1.0937 43.1% YoY to 111,232 units and car sales jumped by 27.3% YoY to 92,253 units. For USD/SWF 0.8934 the first five months, the Group’s car production expanded by 35.5% YoY to 474,780 units; car sales rallied by 19% YoY to 407,306 units. ¢ Overall, GAC Group’s sales performance for May beat our consensus. Amongst, sales of GAC Motor, GAC FLAT Automobiles and GAC Mitsubishi Motor surged by 30.2%, 91.2% and 189.4% YoY to 30,780, 5,842 and 6,616 units respectively in May, keeping a fast growth; Guangqi Automobile climbed by 10.4% YoY to 33,701 units, significant improving as compared to the loss of more than 30% in April. Alongside, sales for GAC Group’s subsidiary Automobile Group Motor, owning a brand of “Chuanqi”, also climbed by 35.9% YoY to 11,461 units, indicating the Group’s product mix improved gradually and it is expected to relieve dependence on Japanese brand in the future. Furthermore, the Group planed to launch pony vehicle of Toyota and SUV of Honda in 3Q14 and 4Q14 respectively, which could further give a boost to the Group’s car sales within this year. Thus, we are cautiously positive towards the Group’s financial performance this year temporarily. ¢ Stimulated by the upbeat sales figures, GAC Group’s stock price increased by 4.9% to HKD8.52, breaking through 250-day MA last Friday. Technically, 14-day RSI also rebound to 63, posting strong performance. We forecast the stock might challenge the high position in April of approximately HKD8.8 in short run.

The above information is provided and distributed by Celestial Securities Limited ( “CSL ”). CSL is a corporation licensed under the Securities and Futures Ordinance. The document is for reference only. Neither the information nor opinion expressed shall be construed, expressly or impliedly, as an advice, offer, invitation, advertisement, inducement, recommendation or representation of any kind or form whatsoever. While the information con tained herein has been obtained from sources believed to be reliable, CSL or its affiliates (“CASH”) do not represent that it is accurate or complete and it should be relied upon. CASH hereby expressly disclaims all liabilities arising out of or incidenta l to the accuracy and completeness of the contents and information herein contained. The contents and information in this document is subject to change without prior notice to you. Trade in securities covered by this report may be made only in those jurisd ictions where the securities are qualified for trading. This document may not in whole or in part be reproduced or furnished to any person other than the addressee without written consent from CASH and CASH shall not be liable to any such third parties for loss arising from any unauthorized distribution. - 1 - 9 June, 2014 >> CFSG Daily Comment

ADR HK Stock Prices Stock ADR Closing Price Adjusted Price Change from (HKEx Ticker) (US$) (HK$) HK Closing Price (HK$) HSBC Holdings (00005.HK) 52.46 81.65 0.344 China Life (02628.HK) 41.12 21.333 (0.556) Petrochina (00857.HK) 120.35 9.366 (0.537) CNOOC (00883.HK) 170.32 13.254 (0.258) Sinopec Corp (00386.HK) 92.2 7.175 0.556 China Mobile (00941.HK) 48.93 76.156 (0.690) China Unicom (00762.HK) 14.68 11.424 (0.272) China Telecom (00728.HK) 49.73 3.87 0.465 Huaneng Power (00902.HK) 42.94 8.354 (0.809)

A – H Comparison A-Share HKD H-Share Stock Closing Price Adjusted Price Closing Price H/A (%)* (HKEx Ticker) (RMB) (HK$) (HK$) ICBC (01398.HK) 3.61 4.54 5.16 114% China Merchants Bank (03968.HK) 10 12.56 14.68 117% Bank of China (03988.HK) 2.7 3.39 3.63 107% Sino Corp (00386.HK) 5.03 6.32 7.14 113% Maanshan Iron (00323.HK) 1.55 1.95 1.64 84% Angang New Steel (00347.HK) 2.82 3.54 4.6 130% Jiangxi Copper (00358.HK) 11.99 15.06 12.9 86% ZTE (00763.HK) 12.89 16.19 15.16 94% Huaneng Power (00902.HK) 5.53 6.95 8.27 119% Huadian Power (01071.HK) 3.22 4.05 4.39 109% Datang Power (00991.HK) 3.53 4.44 3.13 71% China Life (02628.HK) 14.18 17.82 21.3 120% China CITIC Bank (00998.HK) 4.29 5.39 4.65 86% BOCOMM (03328.HK) 3.79 4.76 5.23 110% * > 100% ： H-Share is at a premium on its A-Share ； < 100% ： H-Share is at a discount on its A-Share

Commodities Price

Price Change Change (%)

WTI Crude Oil Futures (USD/bbl.) 102.72 0.06 0.06% Brent Crude Oil Futures (USD/bbl.) 108.62 0.01 0.01% Gold 100 OZ Futures (USD/t oz.) 1,252.98 (0.25) (0.02%) COMEX Silver Futures (USD/t oz.) 19.03 0.03 0.18% COMEX Copper Futures (USD/lb.) 304.90 (0.20) (0.07%) Platinum Spot (USD/t oz.) 1,452.06 - 0.00%

The above information is provided and distributed by Celestial Securities Limited ( “CSL ”). CSL is a corporation licensed under the Securities and Futures Ordinance. The document is for reference only. Neither the information nor opinion expressed shall be construed, expressly or impliedly, as an advice, offer, invitation, advertisement, inducement, recommendation or representation of any kind or form whatsoever. While the information conta ined herein has been obtained from sources believed to be reliable, CSL or its affiliates (“CASH”) do not represent that it is accurate or complete and it should be relied upon. CASH hereby expressly disclaims all liabilities arising out of or incidental to the accuracy and completeness of the contents and information here in contained. The contents and information in this document is subject to change without prior notice to you. Trade in securities covered by this report may be made only in those jurisdictions where the securities are qualified for trading. This document may not in whole or in part be reproduced or furnished to any person other than the addressee without written consent from CASH and CASH shall not be liable to any such third parties for loss arising from any unauthorized distribution. - 2 - 9 June, 2014 >> CFSG Daily Comment

HK Treasury Yield Curve Rates 2-year 3-year 5-year 10-year Date Yield Yield Yield Yield

(%) (%) (%) (%) 05/12/14 0.512 0.911 1.552 2.282 05/13/14 0.512 0.911 1.565 2.308 05/14/14 0.487 0.890 1.521 2.269 05/15/14 0.477 0.858 1.466 2.181 05/16/14 0.468 0.833 1.436 2.140 05/19/14 0.463 0.847 1.438 2.140 05/20/14 0.458 0.836 1.442 2.149 05/21/14 0.437 0.811 1.396 2.112 05/22/14 0.443 0.825 1.422 2.129 05/23/14 0.443 0.821 1.418 2.125 05/26/14 0.443 0.817 1.407 2.113 05/27/14 0.438 0.807 1.416 2.112 05/28/14 0.433 0.782 1.387 2.077 05/29/14 0.412 0.743 1.336 2.015 05/30/14 0.423 0.763 1.362 2.041 06/03/14 0.439 0.791 1.411 2.093 06/04/14 0.444 0.812 1.442 2.129 06/05/14 0.439 0.815 1.437 2.132 06/06/14 0.424 0.797 1.422 2.102

US Treasury Yield Curve Rates 1-month 3-month 1-year 3-year 10-year 30-year Date Yield Yield Yield Yield Yield Yield

(%) (%) (%) (%) (%) (%) 05/12/14 0.020 0.050 0.090 1.670 2.660 3.490 05/13/14 0.030 0.050 0.100 1.620 2.610 3.450 05/14/14 0.020 0.050 0.100 1.570 2.540 3.370 05/15/14 0.010 0.050 0.090 1.550 2.500 3.330 05/16/14 0.010 0.050 0.090 1.560 2.520 3.340 05/19/14 0.010 0.050 0.090 1.560 2.540 3.390 05/20/14 0.040 0.060 0.090 1.530 2.520 3.380 05/21/14 0.040 0.060 0.090 1.550 2.540 3.420 05/22/14 0.030 0.050 0.090 1.570 2.560 3.430 05/23/14 0.040 0.050 0.100 1.550 2.540 3.400 05/27/14 0.030 0.060 0.090 1.560 2.520 3.370 05/28/14 0.040 0.050 0.100 1.500 2.440 3.290 05/29/14 0.050 0.050 0.100 1.520 2.450 3.310 05/30/14 0.050 0.060 0.100 1.540 2.480 3.330 06/02/14 0.040 0.060 0.100 1.600 2.540 3.380 06/03/14 0.040 0.060 0.100 1.650 2.600 3.430 06/04/14 0.040 0.060 0.100 1.650 2.610 3.450 06/05/14 0.030 0.060 0.100 1.630 2.590 3.440 06/06/14 0.020 0.060 0.110 1.660 2.600 3.440

The above information is provided and distributed by Celestial Securities Limited ( “CSL ”). CSL is a corporation licensed under the Securities and Futures Ordinance. The document is for reference only. Neither the information nor opinion expressed shall be construed, expressly or impliedly, as an advice, offer, invitation, advertisement, inducement, recommendation or representation of any kind or form whatsoever. While the information conta ined herein has been obtained from sources believed to be reliable, CSL or its affiliates (“CASH”) do not represent that it is accurate or complete and it should be relied upon. CASH hereby expressly disclaims all liabilities arising out of or incidental to the accuracy and completeness of the contents and information here in contained. The contents and information in this document is subject to change without prior notice to you. Trade in securities covered by this report may be made only in those jurisdictions where the securities are qualified for trading. This document may not in whole or in part be reproduced or furnished to any person other than the addressee without written consent from CASH and CASH shall not be liable to any such third parties for loss arising from any unauthorized distribution. - 3 -