Buy rating for 2823.HK amid increasing capital inflow to China’s A shares

• Highlights of the recent A shares market:
• Overseas investors’ risk appetite for China’s A shares has increased.
• Key economic data announced better than expected, property prices are rising + US Federal Reserve is expected to keep a dovish stance on its monetary policy.
• If A shares are included in MSCI global indexes as expected, then A shares would attract stronger interest from global investors.
• According to newswire, several large overseas exchange-traded funds that track the A-share indices saw net subscriptions … market analysts believe that, China’s A share market will continue to attract foreign capital.
• One of the market analysts highlighted that, China’s manufacturing activity has rebounded in March 2016 to its highest level since last August, mainly attributed to the government’s continued structural reforms.
• Furthermore, he stated that “continued strong sales and more efforts to destock in 3^rd- and 4^th-tier cities have boosted demand for related industries in both the manufacturing and services sectors.”
• Another market analyst suggested that, “all categories of the index showed improvement over the previous month.  It indicates that, the stimulus policies the government has implemented have begun to take hold.”
• The Chinese central bank pumped 162.5 bn yuan into the financial system on Monday in open market operations via medium-term lending facility …

= “Considering that current conditions remain uncertain, the government needs to continue with moderate stimulus measures to reinforce market confidence.”

= “Further monetary and fiscal policy expansion can help stabilize property investment and support urbanization-related infrastructure spending,” said HSBC report.

• In the light of improving A shares market sentiment, we would like to recommend to BUY 2823.HK @ $9.74, which is the lower Bollinger band on the daily chart; 1^st target = $10.32, which is the upper Bollinger band.  Cut loss = $9.78, which is the day-low on 20^th April 2016.

 I, Michael Fung, am a licensed person under the Securities and Futures Commission. Until the date this commentary was published, neither I and/or my affiliates are the beneficiary of the securities mentioned herein or are entitled to any financial interests in relation thereto.