High Purchasing Power of 1.3B Population,,,

Imports to hit $1trillion by 2010
By Jiang Wei (China Daily)
Updated: 2007-06-29 08:24

China is trying to bolster imports to more than $1 trillion by 2010 - up more than 25 percent from $792 billion last year - in an attempt to balance trade, the Ministry of Commerce said Thursday.

The projected 2010 imports figure is almost equal to the country's total trade volume in 2004.

To restructure the country's exports and narrow its widening trade surplus with major trade partners - which hit $177.5 billion last year - the government has adopted a range of measures to curb exports.

In the latest and boldest move yet to rein in exports, the country announced that it will eliminate or cut tax rebates for more than 2,800 export items effective July 1.

Export tax rebates for 553 categories, such as cement, fertilizer and non-ferrous metals, will be eliminated. Rebates for another 2,268 products, described as "easy to trigger trade frictions", will be slashed from 8-17 percent to 5-11 percent. They include garments, toys, steel products and motorcycles.

The reduction of export tax rebates on resource-intensive and polluting products is necessary for China's own development, Wang Xinpei, spokesman for the ministry, said.

"China has never pursued a big trade surplus. The current surplus is a result of international demand and supply."

China stocks tumble amid fears

Chinese stocks fell more than four percent on Thursday as fears about the cancellation of tax on interest on bank deposits continue to plague the market. The benchmark Shanghai Composite Index dropped 4.03 percent to close at 3,914.20 points after moving between 3,912.81 and 4,113.28. The plunge was attributed to several unfavorable factors.

China's top legislature started to debate a proposal on giving the State Council, or the cabinet, the power to reduce or cancel the interest tax. If the proposal is passed and a tax reduction or abolition follows, bank savings will become more attractive. That will help ease a diversion of deposits to the equity market, which has been widely believed as a major factor driving up the high-flying stock prices.

Another proposal under discussion by lawmakers is also affecting the market. The Ministry of Finance has suggested issuing up to 1.55 trillion yuan of special bonds fund purchases of foreign reserves for the yet-to-be-established State Investment Company.

The votings for both proposals will be on this on Friday.

Analysts expect the giant offer of bonds to affect the supply of funds in the country's equity market which is thought to be mainly driven by an over supply of money.
Adding to investors' jitters, assistant central bank governor Yi Gang said Wednesday his agency is determined to make use of a range of monetary policy tools to curb inflation, including interest rates hikes.

However, any monetary tightening is unlikely to target the stock market directly, he noted.
"We are paying keen attention to asset prices, but they are not the decisive factor when determining macroeconomic control measures. We are mainly concerned with inflation, which in China mainly means the consumer price index," Yi told the reporters.

(source: chinadaily.com.cn)

China and HK markets Integration...

HK's biggest challenge ahead is how to ensure it benefits from an integrated market with China, says Hang Seng Bank in monthly economic review. Note says when 2 markets effectively operate as one, companies, investors choose the most efficient one with best price, lowest transaction costs. Adds QFII, QDII, CNY bonds, discussion on price equalisation of A-, H-shares are steps towards integrating 2 markets. While arbitrage mechanism in equities market only affect the 45 dually-listed companies, development could be more significant in longer term when more companies are dually-listed, it says .

HKEX-C1 (0505C1) is very attractive!!!

HKEx TP is HKD130,
Exercise Price =RM37=HKD83.15(Exchange Rate=HKD1=RM0.445)
Ratio=10:1
Expiry date=13/1/2008
TP for HKEx-C1 =HKD(130-83.15)/10=HKD4.685=RM2.08

This provides 68% upside from current price of RM1.24.

HKEx-C1 defenitely is a good bet!

Goldman Sachs Upgrades HKEx to BUY.

Goldman Sachs Upgrades HKEx To Buy; Targets HK$130

2007-6-27 10:17:00 a.m. HKT, DJN

STOCK CALL: Goldman Sachs ups HKEx (0388.HK) to Buy from Neutral, target to HK$130 (29X 2008 EPS) from HK$90 (28X 2007 EPS). "We see HKEx as a robust turnover story" driven by

1. China's strong macro/corporate growth (60% of turnover from China stocks),
2. faster CNY rise;
3. also notes QDII expansion,
4. HKEx's planned reform steps on things like short selling, position limits.
5. Potential arbitrage/cross-trading mechanism between HKEx, Shanghai Stock Exchange positive too.

Stock down 0.5% at HK$106.

Inflation could lead to rate hike - Central bank chief

Interest rates could be raised if inflation pressure keeps building, the central bank governor has said.

If the consumer price index (CPI), a key gauge of inflation, continues to rise, "we don't exclude the possibility of raising interest rates again," Zhou Xiaochuan said on Saturday in Basel, Switzerland, where he was attending a meeting of central bankers at the Bank of International Settlements.

The People's Bank of China raised rates twice this year, with the latest on May 19 when the benchmark one-year deposit rate was raised 27 basis points to 3.06 percent.

The same month, the CPI rose the highest in more than two years - 3.4 percent year on year - as pork and food prices soared. It was the third month this year that the CPI exceeded or nudged the 3 percent mark set by the central bank for this year.

Song Guoqing, a senior economist with the China Center for Economic Research at Peking University, said the June CPI could rise as high as 4 percent due to rapid rises in food prices.
Many economists said the CPI will continue on an upward trend until September or October.
Zhang Yongjun, an economist with the State Information Center, said: "We forecast the CPI will peak at 4 percent around October before it starts to decline."

Dong Dezhi, economist with the Bank of China, said: "We have not seen signs of slow-down in CPI growth in June. It is more than possible that it will continue to rise on the back of the 3.4 percent level in May."

Apart from steep rises in pork and egg prices, prices of aquatic products and fruits have rebounded in June, adding to inflation pressure, Dong observed. Food accounts for about a third of the CPI basket.

While many worry that rising inflation would be inevitable, Zhuang Jian, a senior economist with the Asian Development Bank, said the authorities are well equipped to control inflation following the experience in the 1990s.

The high CPI rates forecast in the coming months presume that there will be no government intervention, he noted.

By Xin Zhiming (China Daily)Updated: 2007-06-25 07:17

New listing: PETROCH-C3, CHLIFE-C1

Both of these CWs will definitely shoot up tomorrow. Based on today's closing price for the underlying share, PETROCH-C3 is only having a premium of 1.16% and CHLIFE-C1 having only 3.52% premium. Now.. those are superbly low premiums! In order to own blue-chip stocks at a cost less than 20 cents, there should be a premium to pay for. No one would call you an idiot for buying PETROCH-C3 at 15% premium, or even at 20% premium. I believe PetroChina will reach its TP of HKD13.50 in no time.

HKEX-C1 hits limit up !

HKEX-C1 hits limit up at RM1.31 in the morning session and maintained its price to close at RM1.29. It rose 28 cents today, gaining about 27%.

The Hong Kong Stock Exchange's turnover has already come close to HKD 100 billion these couple of days, and the amount is increasing day by day. A-shares listing and QDII stories will further boost the turnover of the HKSE.

For sure, HKEX would be the first to benifit from the increasing trading volume. Now let us revise our target price for HKEX to RM120.00. This will in turn move its CW to RM1.60! Another limit up... maybe?

HK shares CWs, an alternative way

By setting a minimum target price for PetroChina (TP: HKD13.50) and HKEx (TP: RM110.00) , the CWs would be RM0.275 and RM1.14 respectively. PetroCH-C1 would increase 6.5cents, equivalent to a 30.95% gain. HKEX-C1 would increase 13cents, equivalent to a 12.87% gain.

These are just minimum target prices as there is definitely more room for the prices to fluctuate.

New listing: KLK-CD, RESORTS-CC

Resorts-CC has a much better upside and could possibly trade around RM0.185

BUY: PetroChina (0857.HK), Target price: HKD13.50

Oil and gas discoveries in Jidong and Longgang, and also more discoveries are expected from the exploration and production (E&P) segment which will benefit PetroChina’s share price. Refining margin has also improved. The booming natural gas sales and upcoming A-share listing are another two catalysts.
UOB KayHian raised net profit forecast by 6% and 15% for FY07 and FY08 respectively. Target price was raised to HK$13.50 from HK$11.50, which represents 15.4x and 14.7x of FY07 and FY08 earnings respectively.

Crude oil price will stay high.
Benchmark crude oil price forecasts revised to US$63, US$60 and US$60 per barrel from US$60, US$55 and US$55 per barrel for FY07, FY08 and FY09 respectively. The sensitivity analysis has shown that every US$1 change in the benchmark Brent crude price will impact EBIT/share by about 2 HK cents for PetroChina’s E&P segment.

Expecting more discoveries.
By end-06, the estimated proved reserves for PetroChina were 11.6b bbls of crude oil and 1,527.6 bcm of natural gas. The two big discoveries, Jidong and Longgang, will enhance PetroChina’s oil and gas proved reserves by 25.5% and 45.8% respectively. This is significant in
size. Yet the market is expecting more positive newsflow. Exploration developments may take place in Changbei field, Sichuan basin and Xijiang.

Refining margin improved.
The refining segment is expected to turn around in 2006 vs EBIT suffering a loss of about Rmb30b in 2006. This is because NDRC has not changed refined product prices much in spite of the sharp fall in crude oil prices in 1Q07. A decent EBIT of Rmb22b and Rmb31b is expected in FY08 and FY09, prompting Beijing to release a new pricing mechanism in 2H07.

Booming gas demand.
The government plans to raise the ppt of gas consumption in total energy consumption to 5% in 2010 from about 3% in 2006. To facilitate the usage of natural gas, construction of infrastructure, including terminals and pipelines, commenced in 2000. With the completion,
there should be a strong jump in gas consumption. PetroChina’s natural gas is expected to maintain 30% CAGR in FY07-09, both from sales and operating profits.

Valuation.
Earnings forecast raised by 6% and 15% for 2007 and 2008 respectively, primarily to reflect higher crude oil price forecast. Target price is raised to HK$13.50 from HK$11.50. It’s a BUY call.

Interest-Income Tax Cut !

China Bank Shrs Jump;Rumors On Interest Income Tax2007-6-15 03:22:00 p.m.

China bank shares gain with several players in market citing rumor Beijing will move as soon as this weekend to cut or scrap interest-income tax, in bid to deter investors from switching funds from bank deposit to stock market; Shanghai Pudong Development Bank (600000.SH) +6.5% at CNY36.37, Industrial Bank (601166.SH) +7% at CNY31.70. Liquidity in bank system turning somewhat tight after repeated reserve ratio hikes, as investors withdraw savings from deposits for stocks; such tax move would help ease banks' short-term liquidity pressure, analysts say. Could give PBOC some room to let rate hikes filter into economy before moving again, given tax cut/scrapping would have similar effect to hiking deposit rate, in terms of making deposits more appealing. Source at local asset management firm says talk is China will halve interest-income tax rate to 10% (Currently 20%) next week while player at local brokerage has heard rumor tax to be abolished; no word as yet though from government officials.
ICEA points out mainland banks "still rely heavily on earnings from interest spread" although they have been working hard to increase non-interest income; thinks if interest-income tax scrapped, in next rate hike central bank may just raise lending rate but not deposit rate, thus benefitting banks. Adds ICBC, BOC likely to benefit most as they have higher portion of time deposits

MS: CNOOC(0883.HK) TP HK$9.20

STOCK CALL: Morgan Stanley starts CNOOC (0883.HK) at Equal-Weight, with 12-month target price of HK$9.20. Says CNOOC now trading at 14X 2007 P/E and 7.5X EV/EBITDA, which at high end of its historical range. However, compared to its Chinese peers, CNOOC's valuation premium has significantly narrowed vs historical levels. "Overall, we view CNOOC's valuations as undemanding." Stock +1.4% at HK$8.42.

MS: SINOPEC(0386.HK) TP HK$9.70

MS Starts Sinopec At Equal-Weight;HK$9.70 Target2007-6-15 10:59:00 a.m. HKT, DJN

STOCK CALL: Morgan Stanley starts coverage of Sinopec (0386.HK) with Equal-Weight rating and 12-month DCF-based target price of HK$9.70. Says support for share price in near term will come from its undemanding valuation and improvement in operating environment; but adds, "long-term prospects remain uncertain given its high gearing and dependence on government policy." Notes stock trading at FY07 P/E of 11X and EV/EBITDA of 6.5X, which at high end of historical range. Stock +1.5% at HK$8.66.

BUY HongKongExchange(0388.HK) TP HK$106

STOCK CALL: UBS starts HKEx (0388.HK) as Buy, target price top-of-the-street HK$106. Believes HK market growth will be fueled by

1. mainland Chinese liquidity flowing through QDII, other channels;


2. forecasts cash market daily turnover to rise to HK$51 billion this year,


3. HK$78 billion by 2011 (18% CAGR in 2007-11);


4. estimates derivatives trading volume CAGR of 33% in 2006-11.

Stock +0.3% at HK$93.60; yesterday's intraday peak of HK$94.15 is all-time high, may not offer much resistance if market conditions remain buoyant.

Prefer Mainland Banks to HK Banks

HK banks' underperformance "set to continue", says ABN Amro; bank shares covered by ABN on average down 4.5% YTD, vs HSI's 4.5% rise YTD, and underperformance may continue due to lack of positive earnings surprises, as cost/income ratios rise, NIMs flat to lower and sluggish mortgage growth continues to weigh on loan growth. Stays Underweight on HK banks, recommends taking profits on Bank of East Asia (0023.HK), believes operating cost pressures in China, narrower Prime-Hibor spread will lead to earnings downgrades, further PBOC rate hikes could threaten China NIM. Overall, prefers Chinese banks to HK banks, "given the lower risk of earnings disappointment and their strong growth".

Good News for Local Steel Makers!

China Steel Makers Down On Tax Rebate Concerns2007-6-14 11:17:00

China steel makers down after State Council says it will adjust some export tax rebates; "such comments intensified concerns that the government will cut tax rebates on steel exports soon," says analyst at Hengtai Securities; notes there have been rumors for a while that China will cut or revoke tax rebates on some metal exports. Baoshan Iron & Steel (600019.SH) last down 3.0% at CNY11.54, Wuhan Iron & Steel (600005.SH) down 2.9% at CNY11.47, Laiwu Steel (600102.SH) off 2.9% at CNY18.90; trading moderate. Analysts remain positive on outlook for steel shares, which may benefit from urbanization process of China; also steel shares look cheap at 15-20X earnings, vs around 40X for overall market. "There may be a good chance to pick up some good names if steel shares fall sharply.

Malaysia's steel counters are trading below 10X 07PE. I prefor OrnaSteel, Hiaptek and Masteel.

New listing: CHMOBIL-C3, HKEX-C1

Taking a premium of 15% to 20%, CHMOBIL-C3 will be trading between RM0.575 to RM0.740. Referring to the table, I reckon that HKEX-C1 will perform better. At 15% to 20% premium, HKEX-C1 will be trading between RM0.93 to RM1.13. That is equivalent to a 45.5% to 78% gain in price.

Another two zero strike call warrants will be listed tomorrow; CHMOBIL-C2 at RM31.568 and HKEX-C2 at RM37.963. Zero strike call warrants has no strike price/exercise price and the conversion ratio is 1 to 1. Both the zero strike CWs have a longer maturity period which is 24 months. In order to get the call warrant's fair value, just factor in the exchange rate onto the underlying share price.


PS: There is no recommendation to buy or to sell the CWs mentioned. This is merely a reference for those who have obtained the CWs at subscription price.

China RMB hits new high against USD

China's yuan hits new high against GreenbackBy Dong Zhixin (chinadaily.com.cn)Updated: 2007-06-13 16:45
China's currency hit a new high against the American dollar on Wednesday amid rising and raucous calls in the United States' congress to increase the value of the yuan more quickly.
Before trading started on Wednesday morning, the People's Bank of China set the midpoint at 7.6282, breaking the 7.63 barrier for the first time since China ended the peg to the US dollar on July 2005. The yuan is allowed to move 0.5 percent up or down the midpoint in a day.
The record high central parity rate came after the yuan posted the largest daily gains in two years, rising 0.26 percent to 7.6436 against US dollar on Tuesday.
Analysts attributed the faster appreciation partly to a due US Treasury Department report scheduled to be released Wednesday. The semiannual evaluation of exchange-rate manipulation may increase pressure for faster revaluation, according to analysts.
Hours after the report is unveiled, US lawmakers plan to introduce legislation to push China to loosen controls on the yuan, reports said.
The analysts also pointed to two other factors: The Consumer Price Index, a key measure of inflation, hit a two-year high of 3.4 percent in May, raising the possibility of an interest rates hike, and the country's trade surplus soared 73 percent to US$22.45 billion in May.
They expect the yuan to breach the 7.60 mark against the US dollar at the end of month as the US increases pressure. Some US lawmakers and businesses accuse China of keeping the yuan artificially low to give its exports an unfair advantage.
Concerned about rising tensions with major trading partners, as well as a slump in world economy, resulting in fewer demands for Chinese products, China has been taking measures to boost domestic consumption to reverse the over-reliance on exports.
In May, China's retail sales rose 15.9 percent from a year earlier to 715.8 billion yuan, the fastest pace in three years, said the National Bureau of Statistics on Wednesday. The increase came on top of a 15.5 percent gain in April.
The growth was mainly driven by rising incomes and a booming stock market which has soared more than 50 percent so far this year after a 130 percent rally in 2006.
Sales in the country will grow about 14 percent this year, the Ministry of Commerce said earlier this month. China will probably surpass Japan by 2010 to become the world's second-largest consumer goods market after the US, Vice Premier Wu Yi said on May 24.

New listing: Gamuda-CD & Genting-CE

Gamuda-CD is currently having 12.56% premium. Let's just assume Gamuda-CD will be trading near 15% to 20% premium on its first trading day. The price of Gamuda-CD could possibly be around 18 cents to 22.5 cents. For your information, Gamuda-CC (previous CW) which closed at 21 cents yesterday is still trading at a 13.89% premium.

Genting-CE with a premium of 21.88%, has a limited upside as compared to Gamuda-CD. I'd suppose the price would not move much, unless there are crazy traders in the market that are brave enough to jump in at the current price. Even so, Gamuda-CD would be a much better bet.


PS: There is no recommendation to buy or to sell the CWs mentioned. This is merely a reference for those who have obtained the CWs at subscription price.

China Agri (606.HK) is a buy!

China Agri-Industries (0606.HK) tumbles 9.3% to HK$5.65 on trading resumption, hurt by concerns bio-fuel business may be affected by Beijing policy to halt grain-based bio-fuel projects, despite company saying it hasn't received official documents on this. UOB-KayHian says under new policy, government won't issue new licenses for new projects, but China Agri's Zhaodong facility has already got exclusive NDRC license; further, all of China Agri's new planned projects will use non-grain feedstock to produce fuel ethanol. UOB adds company believes reported policy "aims to regulate new grain-based projects, rather than to suspend production of existing grain-based projects".

Foreign share call warrants

Lately there has been a number of foreign share call warrants issued by our local investment banks, namely OSK and CIMB. OSK being the pioneer has successfully launched China Mobile, ICBC, and PetroChina CWs on the 5th of June and to date all three are still trading above subscription price. In case you did not notice, the CWs issued by OSK have exercise prices denoted in HKD. Meanwhile the ones issued by CIMB are denoted in RM. I bet many would have known how to value a CW based on its premium/discount, implied volatility, gearing, and etc. But in the case of foreign share CWs, we must take into account another factor which is the exchange rate. The appreciation on our currency (RM) against the foreign currencies (in this case, HKD or SGD) , will reduce the value of these foreign share CWs. If HKD and SGD were to appreciate against RM, the foreign share CWs will have a higher value.

As for the new listings, I have computed the premium and percentage gain in price for HSBC-C1 and SingTel-C1. Based on the performance of previously listed foreign share CWs issued by OSK, I reckon these CWs would also be trading around 20% to 25% premium on the first and second day. Referring to the table above, HSBC-C1 would be trading between RM1.07 to RM1.38 (69% to 119% gain), and SingTel-C1 trading around RM0.745 to RM0.935 (18% to 48%). It seems that HSBC’s CW has more upside potential than SingTel's.

BUY Sinopec (0386.HK) TP HK$11.00

Lehman Brothers raises target price for Sinopec (0386.HK) to HK$11.00 from HK$8.65 after incorporating estimated value of its oil and gas discoveries, as well as from 2-3% rise in earnings forecast due to strong chemical EBIT. "Within the China oil sector, we forecast that the company will achieve the highest y-o-y earnings growth of 41% compared to no growth for CNOOC (0883.HK) and 17% growth for PetroChina (0857.HK) for FY07." Adds valuation still attractive at 9.5X 2007 forecast P/E.

Rates Concerns just EXCUSE for Profit Taking!

While focus on interest rate direction after spike in U.S. Treasury yields hit global equities, "I think the correction itself is needed given markets'' strong rally," says YK Chan of Phillip Asset Management; notes Treasury''s 5%-plus yield itself not particularly alarming, merely median point of yields in past 10 years. U.S. stocks'' bull run in past several months increasingly driven by M&A activity, which itself unsustainable, says investors merely using bond yield rise as excuse to take profits. For HK market, property stocks taking a hit today, but given shrinking weighting in HSI, unlikely to hurt market much, Chan says. Index in short term may test 20000, but at that level, blue chips will be attractively valued. HSI now down 1.6% at 20473.67, property sub-index down 2.1%.(

China Mobile (0941.HK) TP :HK$84

Goldman Sachs ups China Mobile (0941.HK) to Buy from Neutral, target to HK$84 from HK$73. Says tepid share performance in past 3 months likely due to regulatory pressure on tariffs, lower-than-expected EBITDA margins, gradual market recognition CM will bear TD-SCDMA burden, new competition will not be indefinitely delayed. But "we think these issues are now well understood and in the price". Says 2 key catalysts lie ahead: stabilization/recovery in operating trends, progress toward 2H07 A-share listing. Stock +0.2% at HK$73 yesterday.

New listing: BURSA-CE, TM-CE

New call warrants (CWs), BURSA-CE and TM-CE has just been listed on the trading board. Using different prices of the CWs, I have computed the premium and percentage gain in price accordingly. At current mother share's closing price, BURSA-CE has a premium of 9.83%, meanwhile TM-CE has a premium of 12.55%. Both stocks are considered very attractive at this level.

The good news:
On a usual trading day, I would expect the CWs to trade around 25% to 30% premium on the first day of trading. With that level of premium, anyone who has gotten these CWs at subscription price would be able to achieve about +83% to +130% gain in their portfolio.

The bad news:
The Dow plunged a massive 198.94 points this morning. Over the past 3 sessions, the Dow industrials have lost 410 points. With benchmark yield surging above 5% , stocks no longer look attractive. Besides that, there is data on jobs and retail sales pressuring bonds, as well as the tide of rising interest rates around the world. This would probably reduce the potential upsides of the CWs. Hopefully, both BURSA-CE and TM-CE will be able to trade on the positive levels. I would not put any high hopes this time. *fingers crossed*

HKEx Monthly Market Highlights-May2007

Hong Kong Exchanges and Clearing Limited

Getting ready for the next bargain-hunt.

The Shanghai Stock Exchange Composite Index tumbles 8.257%, a massive 330.341 points closing at 3670.401. This may be a loss to many investors, but also an opportunity for others to jump in at lower prices and enjoy the long bull ride. The awaited 20% correction has already begun. From the high of 4335.963 on the 29th of May 2007, a 20% downward adjustment will bring the index to 3468.770.
After today's plunge, we will need just about another decrease of 201.631 points on the SSE composite index to spark a good time for bargain-hunting. Just get your guns loaded with sufficient bullets !

Additional info:
The top 10 largest stocks listed on SSE (as at 15th January 2007) are as follows:
1. Industrial and Commercial Bank of China (1,397.86 b)
2. China Life Insurance (904.78 b)
3. Bank of China (887.31 b)
4. Sinopec (692.22 b)
5. China Merchants Bank (201.09 b)
6. Shanghai International Port (164.56 b)
7. Baosteel (161.81 b)
8. Daqin Railway (114.71 b)
9. CITIC Securities (107.99 b)
10. Shanghai Pudong Development Bank (104.30 b)

HKEx Monthly Market Highlights-April 2007

Hong Kong Exchanges and Clearing Limited

法院三司判決不一致 宗教不自由阻先進國

《東方新聞網》- 新聞顯示及管理系統: "法院三司判決不一致　宗教不自由阻先進國"

永远没有最好的买进时机。。。

因为市场上总有令人担忧的情况在发生，无时无刻。这也就是人生。
过去4年一路看坏美国股市的价值形投资大师，结果是未能众中获利！！
历史重演，地点换成了中国。。。。。

Even 30% Fall in China Shrs Wouldn't do much!

Citigroup in note says without Beijing''s continuous policy action, China A-share market correction likely temporary, but even if market corrected 30%, impact on economy would be about 1 percentage point drop in GDP growth with retail sales growth would fall 3 percentage points; implications for bank loan quality likely limited, but property prices may rise if stock funds flow into property.

Some Statistics about HK and China

Market Capitalisation as at 31/05/2007

HongKong HKD14,982B =RM6,592B (1HKD=0.440RM)

CHINA (ShangHai&Shenzen) = RMB17,773B =RM7,970B(2.23RMB=1RM)

Average PE in HongKong main board=16.94X ,GEM=35.69

Average PE in ShangHai A shares=43.42 , B Shares=46.21

Average PE in ShenZen A shares=54.87, B shares=25.20

Turnover in HongKong=77.65B

Tourover in China=239.522B