Semiconductor Manufacturing International Corporation’s (SMIC) ADR price has appreciated significantly since our company news alert, dated 15 December 2008, following news that the company intends to increase its focus on the Chinese economy, which is expected to benefit from a recently announced Chinese government economic stimulus package. Although we expect SMIC to benefit from a boost in domestic demand, we reiterate our cautious medium term outlook in light of the current global economic downturn and profitability concerns. Therefore, we believe the recent price surge has left the ADR significantly overvalued and hence we reiterate our SELL rating. We maintain our SELL rating for the Hong Kong stock based on our fundamental outlook. The Hong Kong dollar is pegged to the US dollar; therefore, we do not anticipate any currency impact.

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