Dim Sum Express

A-Share Market

    Banking: VAT tax reform to have minimal impact on sector tax burdenA value-added tax scheme will be launched for financial companies to replace the existing businesstax from May 1 onwards. As the lending business, for which input tax is not deductible, is typicallythe main source of income for banks, we estimate that some banks might see their overall tax burdenincrease following the reform. Our calculation shows that the changes in tax burden following thenew tax scheme vary among the ten banks that we looked at, with the average impact on net profitto be within 1%.

    Hong Kong Market

    China Property: Key takeaways from communications with industry expertsMost of the developers and fund managers we talked to yesterday see downward pressure onproperty ASP and transaction volume in some overly heated markets such as Shenzhen, Suzhouand Nanjing. Given the rising land costs in first and second-tier cities, as well as narrowing industrygross margin, most of them are bearish on small developers. We expect property ASP in the city todrop 10%-15% YoY in 2016. However, we believe total residential GFA sold in China will still pick up10%-15% YoY this year. We suggest sticking to industry leaders with clear earnings visibility.