CCBIS is Positive on China’s Economic Growth Outlook for 2011 Normalization of China’s Monetary Stance will Contribute to Healthy Expansion

Hong Kong - 14 December 2010 – CCB International Securities (CCBIS) released its 2011 sector outlook on China’s economy today. We believe economic growth in China will enjoy solid momentum underpinned by rising consumption and stabilizing fixed asset investment (FAI) in spite of weakening external demand. In light of rising inflation, we expect the Chinese government to implement a combination of relatively loose fiscal policy and tight monetary policy in 2011. Key investment themes for the coming year will be the preference for enterprises with exposure to tier II and tier III cities, increasing M&A, industrial consolidation, strategic industries receiving government support from 2011 to 2015 and further progress in renminbi internationalization. Our presentation, covering three major themes of our 2011 outlook, is broken down into three sections: “China Economics”, “Global Financial Strategy” and “Investment Strategy”. These will be presented by Dr. Peter So, Managing Director and Co-Head of Research; Mr. Paul Schulte, Managing Director and Global Head of Financial Strategy & Asia Banks Research; and Dr. Banny Lam, Associate Director and Economist, respectively. Our sector outlook describes how the global economic recovery, though still fragile, is nevertheless gaining momentum, while emerging Asia is going from strength to strength. According to Banny Lam, “With the second round of quantitative easing in place in the US, liquidity is no longer the market’s main concern, rather it is the lack of confidence among investors and consumers. Further monetary easing in the US could drive up international commodity prices, which will put greater upward pressure on China’s domestic industrial and food prices. We expect GDP growth in 2011 to reach 9.5%. CPI will pick up further to 4.2% YoY in the first half of 2011 driven by cost inflation in both agricultural and industrial production. We expect average incomes for urban and rural households to realize 10 to 15% YoY growth in 2011. This, together with rising inflation, should lead to 18.5% YoY growth in retail sales in 2011.” Given rising inflation and the pressure to manage liquidity, we expect the People’s Bank of China (PBOC) to adopt greater tightening measures in 2011, including two 50bp-reserve requirement ratio (RRR) hikes and five interest rates hikes of 125bp in 2011. Renminbi appreciation by 5% against the US dollar is expected in 2011. Turning now to the financial sector, we expect inflation in Asia and deflation in the West. Paul Schulte says, “Reflation creates the need to move away from cash rich companies toward asset rich companies. This means that banks will outperform. Governments in the East will ration credit and leverage wins in an inflationary environment. A deflationary environment is highly likely in Europe as debt levels quash asset prices. Banks will be under pressure and asset allocation will shift to GEMS. In our view, bank M&A will intensify as western banks vie for market share in Asia and other emerging markets. Our global, Asia and emerging market portfolios reflect these views.” On the investment side, we expect to see robust growth in Hong Kong continue despite overhangs in the economy. In general, we expect Hong Kong to achieve robust growth of 6.6% in 2010 and 5.7% in 2011. We forecast the Hang Seng Index (HSI) and HSCEI to reach 28,800 and 16,500 by end-2011, equivalent to a PER of 15.4 and 13.9, respectively, based on 2011 earnings. Peter So says, “We believe market corrections present good buying opportunities for investors to position their portfolios in anticipation of sustainable growth in 2011. In 2011, China is likely to raise its interest rate five times, while Hong Kong’s interest rate will remain largely unchanged. Thus we forecast H-shares will outperform A-shares in 2011, and that the Hang Seng A/H Premium Index will narrow further. We also anticipate stronger performance by the second- and third-tier stocks than blue chips in 2011.” We provide analysis and ratings on the following sectors: China banking (Overweight), China insurance (Overweight), consumer discretionary (Overweight), internet (Overweight), technology (Overweight), metals and mining (Overweight), China property (Neutral), Hong Kong property (Neutral), and construction (Neutral). For more information about the research report, please visit http://www.ccbintl.com/eng/download.aspx?category_id=6 -End- About CCB International Securities Limited CCB International Securities Limited (“CCBIS”) is the professional brokerage arm of CCB International (Holdings) Limited, primarily providing brokerage and research services for its institutional investors and professional investors. CCBIS’ sales, trading and research teams are headed by industry professionals with years of solid experience at bulge bracket banks. Its clients include global mutual and hedge funds as well as Qualified Domestic Institutional Investors (QDII). CCBIS took the lead to launch the state-of-the-art Fidessa trading platform among Chinese securities firms which allows its institutional clients full real-time electronic trading capabilities. The research department provides clients with in-depth economic, industry and company-specific analysis of China and Hong Kong’s key industries including banking, real estate, insurance, energy, resources, infrastructure, telecommunications, internet and online gaming, and retail and consumer products. For further enquires, please contact: Ketchum Hong Kong Ivis Tsang Tel: (852) 3141-8082 Fax: (852) 2510-8199 Email: ivis.tsang@knprhk.com CCBIS Sandy So Tel: (852) 2532-6745 Fax: (852) 2537-0097 Email: sandyso@ccbintl.com Disclaimers: CCB International Securities Limited is a wholly-owned subsidiary of China Construction Bank Corporation. Information herein has been obtained from sources believed to be reliable but CCB International Securities Limited, its affiliates and/or subsidiaries (collectively “CCBIS”) do not warrant its completeness or accuracy or appropriateness for any purpose or any person whatsoever. Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Investment involves risk and past performance is not indicative of future results. Information in this report is not intended to provide professional advice for any prospective investors and should not be relied upon in that regard. 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