Optimism from Sharp Rate Cut Retreated; American Stock Market Closed Low

December 18, 2008

Global News & Information By Global Capital Research Group

Major Global Indexes Dow Jones Index was frustrated by 99.80 points or
Closing Margin (%) 1.12% at 8824.34 points as of closing.
Dow Jones 8824.34 -1.12 On Wednesday, American stock market closed low; Dow
S&P 500 904.42 -0.96 Jones Index was frustrated by 99.80 points or 1.12% at
UK:UKX 4324.19 0.35 8824.34 points; S&P 500 Index sagged by 8.76 points or

Nikkei 225 8612.52 0.52

0.96% at 904.42 points, while NASDAQ Index slipped by
10.58 points or 0.67% to 1579.31 points.
Hang Seng 15460.52 2.18

Index of mortgage loan application activity kept high

Major Price Indicator
in America.
Closing Margin (%)
The substantive financial plan launched by the Federal
WTI Crude Oil 40.06 -8.12
Reserve at late November continued taking positive
COMEX Gold 867.9 1.14
effects; aiming at boosting the housing market, the plan
LME Copper 3020 -1.63
lowered cost of housing mortgage loan and warmed
LME Aluminum 1510 2.65
activities within the market. Data released on
BDI Index 836 0.97
Wednesday by Mortgage Bankers Association (MBA)
showed that fixed interest rate of 30-year mortgage loan
Hong Kong Industries
had declined by 0.26% at 5.18% up to the week of
Closing Margin (%) December 12, hitting the new low in recent five years
Raw Material 5309.36 7.91 and a half. Interest rate cut warmed the refinancing
Energy 7875.70 5.84 activities and increased number of mortgage loan
Information & application on the whole. The rate cut released
883.66 5.34
Technology yesterday was likely to flourish refinancing activities,
Real Estate & which would help recover the housing market as early as
1866.52 3.47
Construction possible.
Telecom
1749.71 3.35
Service Deficit of American current accounts narrowed.
In Q3 2008, deficit of American current accounts
Performance in Recent 5 Days narrowed to USD174.1bn from USD180.9bn in Q2 2008,
while the market expectation was USD179bn.
Additionally, deficit of American current accounts in Q3
2008 accounted for 4.8% of the GDP, 0.3ppt lower than
that of the previous quarter. Since American import
volume was above that of the export, global economic
weakening would result in faster decline in export based
--- Hang Seng Index ---- SSE Composite Index on absolute value, thus trade balance narrowed.
Japan auto manufactures faced depression; daily production got further cut and Honda
slashed earning forecast.
American auto industry was on the verge of bankruptcy relying on government support, while
situation of Japan auto makers was another concern. Honda, the second largest auto maker in
Japan, reduced its net profit forecast of 2008 fiscal year from JPY485bn to JPY185bn (down
by 62%) on Wednesday. Meanwhile, Japan auto makers declared that due to
beyond-expectation demand shrinkage, additional 78000 cars would be cut in production in
Japan from January 2009.

Hang Seng Index soared 330.31 points or 2.18% at 15460.52 points.

On Wednesday, Hong Kong stock market took on upward trend after opening high. Hang Seng
Index soared by 330.31 points or 2.18% at 15460.52 points, while Hang Seng China
Enterprises Index rose 308.51 points or 3.83% at 8372.26 points.

Real estate shares universally advanced.

HKMA followed the Federal Reserve to cut interest rate by 1ppt to 0.50%, thus local real estate
shares universally advanced; Cheung Kong (00001.HK) and Sun Hung Kai Properties
(00016.HK) surged by 0.25% and 4.01% respectively, while New World Development
Company (00017.HK) and Henderson Land (00012.HK) both saw over 6% growth. Owing to
rate cut anticipation in mainland, real estate shares of China enterprises sharply ascended,
with China Overseas (00688.HK) and R&F Properties (02777.HK) up by 4.51% and 7.41%
separately.

Financial shares underperformed the market.

Finance sub-index underperformed the market: HSBC Holdings (00005.HK) went up only
0.36%; PICC Property & Casualty (02328.HK) fell by 5.25% against the market trend, while
China Life Insurance Company (02628.HK), Ping An Insurance (02318.HK), China
Construction Bank Corporation (00939.HK), Industrial and Commercial Bank of China
(01398.HK), China CITIC Bank Corporation (00998.HK), Bank of China (03988.HK), China
Merchants Bank (03968.HK) and Bank of Communications (03328.HK) all advanced by
ranges from 1.96% to 7.61%.
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Investment Rating System

Performance of stock or sector relative to TX Free-float Index over next 6 months after research publications

Rating Remark
1 Buy Relative performance over TX Free-float
Index >15%

2 Overweight Relative performance over TX Free-float Index 5% ~

15%

3 Neutral Relative performance over TX Free-float Index -5%

~ 5%

4 Underweight Relative performance over TX Free-float Index -5%

~ -15%

5 Sell Relative performance over TX Free-float Index

<-15%

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