Financial Institutions In Hong Kong The Prospectus Of The Hong Kong Stock Market

Development of Hong Kong Stock Exchanges The association of stockbrokers in 1891 which was the First formally recognized stock market in Hong Kong The organization became the Hong Kong Stock Exchange in 1914 The Second exchange, the Hong Kong Stockbrokers’ Association was incorporated in 1921 and merged with the Hong Kong Stock Exchange after World War II in 1947 The merged organization was called the Hong Kong Stock Exchange Tiffany

After World War, formation of Three other exchange: Far East Exchange (established in 1969) Kam Ngan Exchange (established in 1971) Kowloon Exchange (established in 1972) In 1980, the Four exchanges were merged into a Single entity known as the Stock Exchange of Hong Kong Ltd The Four single exchanges ceased trading individually on 27 March 1986 and the new exchange commenced trading via a computer-facilitated system on 2 April 1986 Tiffany

HKEx is now a listed campany on the SEHK In 1999, the Hong Kong Financial Secretary announced significant market reforms for the securities and futures markets To facilitate the process of reform, the Stock Exchange of Hong Kong Ltd and Hong Kong Futures Exchange Ltd demutualized and, in conjunction with the Hong Kong Securities Clearing Company merged on 6 March 2000 to form a New holding company, Hong Kong Exchanges and Clearing Ltd HKEx is now a listed campany on the SEHK Tiffany

Stock classification Blue chips Red chips H shares Others Red chips, H shares China-aff Stocks At 2005 206 Jason

Main Board In 2004, the market capitalization was HK $6,629,176.75 million. Number of Shares:892 Jason

GEM Board In 2004, the market capitalization was HK $66,716.07 million. Number of Shares:204 Jason

Market capitalization HSBC HOLDINGS (Main Board) HK $1,485,758.51 million Tom online (GEM Board) HK $ 8,200.9 million Jason

Market capitalization HSBC HOLDINGS =181 Tom online HSBC HOLDINGS =22 Gem Board Gem Board is relatively small Jason

The market capitalization of Hong Kong Stock market Comparison with the past data Comparison with other countries Kenneth

Comparison with the past data FROM 1970 – 2004 Kenneth

Comparison with the past data The past data of the main board The highest day : 28/8/1998 trading value --- HK$79,002.61M The lowest day : 9/6/1970 trading value --- HK$6.15M Kenneth

Comparison with the past data The past data of the main board The highest whole year trading value : 2004 HK$3,948,350.84M The second highest whole year trading value : 1997 HK$3,788,959.79M Kenneth

Comparison with the past data The securities market of Hong Kong was growing from 1970 to 2004 Average daily trading value : HK$20.6M HK$15,856.83 Kenneth

Comparison with the past data Some main event through 1970 – 2004 Example : 1997 Asia financial crisis - a suddenly drop of trading value ----- - from HK$3,788,959.79M (1997) (1998) HK$1,701,112.01M Kenneth

Comparison with the past data An increasing influence of listings of Mainland enterprises in Hong Kong The first Mainland enterprises listing in HK : 青島啤酒 (0168) --- 7/1993 The China factor, including China Aff Shares and the H shares, becoming very important to the HK market Kenneth

Comparison with the past data To the end of 2004 The number of Mainland enterprises listing in HK : 304 28% of the HK stock market The total market capitalization : over HK$2,020,500M 30% of the HK stock market The whole year trading value : over HK$1,665,100M 42% of the HK stock market Occupy 8 of the Top 10 HK IPO In the history of HK stock market, all of the Top 10 IPO was Mainland enterprises Source : www.tdctrade.com/econforum/boc/chinese/boc050201c.htm Kenneth

Comparison with other countries As at end June 2005 Hong Kong’s Stock Market ranking in Asia is the second Ninth in the Worldwide ranking the market capitalization is US$895 billion Kenneth

Table A - Market Capitalisation of the World's Top Stock Exchanges (As at end June 2005) Worldwide Ranking 世界排名 Ranking in Asia 亞洲排名 Market Capitalisation (US$ billion) 市值 (以10億美元計) US (NYSE) 美國 (紐約證券交易所) 1 12,865 Japan (Tokyo) 日本 (東京) 2 3,394 US (Nasdaq) 美國 (納斯達克) 3 3,388 UK (London) 英國 (倫敦) 4 2,734 Euronext 5 2,286 Canada (Toronto) 加拿大 (多倫多) 6 1,239 Germany (Deutsche Börse) 德國 (證券及衍生工具交易所) 7 1,120 Spain 西班牙 8 920 Hong Kong 香港 9 895 Switzerland 瑞士 10 798 資料來源：全球證券交易所聯會 Kenneth

Forecast More and More China-aff Stocks Motive power for the HK Stock market Kenneth

The influence of the China Aff stocks high economic growth rate of the China the Mainland enterprises & China Aff shares directly benefited Trend : increasing number of Mainland enterprises applying for listing in HK Increasing value of market capitalization zoe

The market capitalization Statistics on China enterprises (H shares)(2000-2005) Market capitalization Year HK $Billion % of equity total 2000 85.1 1.78 2001 99.8 2.57 2002 129.2 3.63 2003 403.1 7.35 2004 455.1 6.67 2005 1173.3 16.68 zoe

The market capitalization Statistics on red chips stocks (2000-2005) Market capitalization Year HK$ Billion % of equity total 2000 1203.5 25.1 2001 908.8 23.39 2002 806.4 22.66 2003 1197.7 21.67 2004 1409.3 21.26 2005 1758.9 23.32 zoe

Why was this happen? 成報  (16-11-2005) zoe

Why was this happen? 國家外匯管理局 今年1月及4月發布了「11號」及「29號」通知 規條繁雜的通知書 令內地的紅籌股上市大減 今年10月21日發布的「75號」通知 使外資公司紅籌上市申請條件及程序明朗化 zoe

Equities Funds Raised HK$Million Year 1993-2004 Total Equities Funds Raised By All Stocks 1854144.53 Total Equities Funds Raised By the China-Aff Stocks 81019547 over 43% of the Equities Funds Raised at Main board and the Gem board are occupied by the China-Aff Stocks. zoe

Funds raised by IPO Main Board Gem Board Henry

Funds raised by IPO in Main Board Year 2005 (up to 28th October 2005) Henry

Funds raised by IPO in Main Board Henry

Funds raised by IPO in Main Board Henry

Funds raised by IPO in Main Board Total funds raised is $136,543,877,070 Henry

Funds raised by IPO in Main Board Total Funds Raised by H shares is $131,253,961,730 6 2727 上海電氣集團股份有限公司－Ｈ股 28/04/05 $ 5,053,950,400 12 1088 中國神華能源股份有限公司－Ｈ股 15/06/05 $25,489,368,750 14 3328 交通銀行股份有限公司－Ｈ股 23/06/05 $16,834,925,000 17 1919 中國遠洋控股股份有限公司－Ｈ股 30/06/05 $ 9,537,000,000 22 2777 廣州富力地產股份有限公司－Ｈ股 14/07/05 $ 2,284,357,680 36 3399 廣東南粵物流股份有限公司－Ｈ股 26/10/05 $ 476,100,000 37 939 中國建設銀行股份有限公司－Ｈ股 27/10/05 $71,578,259,900 Henry

Funds raised by IPO in Gem Board Year 2005 (up to 13rd October 2005) Total funds raised is $550,291,100 Henry

Funds raised by IPO in Gem Board Total Funds Raised by H shares is $132,691,100 3 8251 上海楝華石油化工股份有限公司 13/07/05 $54,590,000 4 8329 深圳市海王英特龍生物技術股份有限公司 12/09/05 $78,101,100 Henry

Funds raised by IPO Total funds raided by IPO in the Main board and Gem board are $137,094,168,170 Total funds raised by China enterprises (H shares) is $121,574,261,330 which occupied 88.6% of the total funds Henry

Funds raised by IPO Ranking of China-Aff stocks raised funds by IPO 1 Listed time Funds raised from IPO Stock name 1 27/10/05 建設銀行 (939) $62,241,968,400 2 22/06/00 中國聯通 (762) $43,607,699,091 3 23/10/97 中國移動 (941) $32,665,054,560 4 18/12/03 中國人壽 (2628) $26,713,818,250 5 19/10/00 中國石油化工股份 (386) $26,680,975,920 6 15/06/05 中國神華 (1088) $25,489,368,750 7 07/04/00 中國石油股份 (857) $21,213,185,920 Henry

Trading Value 10 most active stocks in dollars in 2004: China-Aff stocks occupied 6 of them (3,4,6,8,9,10) Henry

Trading Value The statistics for the trading value in 2004: Trading value of Red chips stocks and H shares occupied 45% of the whole Total trading value on Gem and Main Board (HK$mil) $3,422,929 Red chips stocks and H shares trading value (HK$mil) $1,555,812 Percentage occupied 45% Henry

China-Aff share’s position Total funds raised by China enterprises (H shares) is $121,574,261,330 which occupied 88.6% of the total funds China-Aff stocks occupied 5 in 10 of the most active stocks Trading value of Red chips stocks and H shares occupied 45% of the whole stock market China-Aff stocks show their important position in the stock market of Hong Kong Henry

What is the role of Hong Kong Stock Exchange ? Anthony

Opportunity Direct Indirect Anthony

Direct Standard system and supervision Recognition of Hong Kong Stock Exchange Congenital advantages of Hong Kong Anthony

1.)Standard system and supervision (direct) International-based follows: the instruction of international accounting system rule of business administration more confidence Anthony

2.)Recognition of Hong Kong Stock Exchange (direct) globally function price powerful financing and re-financing Anthony

3.)Congenital advantages of Hong Kong (direct) close relationship close distance close culture China Anthony

Indirect Consideration of financial safety in China Non-stop economic growth in China Anthony

1.)Consideration of financial safety in China (Indirect) not well-developed financial system depends mainly on the banking system(人民銀行) 99% financing from banks in the 1st term high risk and pressure on banking system Hong Kong’s total market value relative to GDP-----400% China <30%; USA and England<100% risk sharing by international investors Anthony

2.)Non-stop economic growth in China 9% growth rate in recent 3 years demand of financing need time to wait for the improvement and restructuring of financial system of China impossible to wait Anthony

The End

Q&A

(d) Hong Kong Exchanges and Clearing Ltd (e) Hong Kong Stock Exchange 1.) Stock Exchange of Hong Kong Ltd is formed by four exchange. Which of the following is not one of them? (a) Kam Ngan Exchange (b) Kowloon Exchange (c) Far East Exchange (d) Hong Kong Exchanges and Clearing Ltd (e) Hong Kong Stock Exchange

2.) Which of the following(s) is/are the China-aff Stocks? (a) H Shares (b) Red Chips (c) Blue Chips (d) A and B are true (e) All of the above

(a) Standard system and supervision (b) Close relationship with China 3.) Which one is the advantage of Hong Kong for the development of financial system? (a) Standard system and supervision (b) Close relationship with China (c) Close distance with China (d) Close culture with China (e) All of the above

Group Members: Lam Shuk Yee Zoe (033087) Chiang Ho Wang Jason (033098) Lui Ka Fai Anthony (033100) Cheng Hang Lee Henry (033101) Yan Wai Man Tiffany (033103) Chan Ka Shu Kenneth (033183)