SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | www.kimeng.com Margin Trading 05 June 2008.

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SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | Margin Trading 05 June 2008

SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | 2 What is Margin Trading? Margin Trading is buying stocks and shares using a credit line granted by the brokerage. It is secured by a pledge of cash and/or marginable shares by the investor as collateral.Margin Tradingcollateral

SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | 3 Advantages of Margin Trading For investors: The opportunity to amplify returns For brokers: Enjoy greater trading volume Increase in commission income Mitigate against trading losses For stock market: Increase liquidity Encourages broader market participation A step closer to becoming a world class stock market Stronger ability to attract more companies to list

SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | 4 The Basics of Margin Trading To trade on margin, an investor needs to open a separate margin account.margin account A margin account opening agreement must be completed and signed. An initial deposit is required to activate a margin account. This deposit is known as the minimum margin.minimum margin Once the account is opened and operational, the investor can borrow up to 50% - 70% of the purchase price of a stock. The balance 30% - 50% of the purchase price that the investor must deposit is known as the initial margin.initial margin Marginable securities in the account are known as collateral.collateral

SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | 5 Margin Agreement Definition Terms and Conditions Power of attorney Letter of Authorisation Memorandum of charge Risk disclosure statement Other essential information includes Credit Limit Debit interest rate Margin Maintenance Level List of Marginable Securities

SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | 6 Maintenance Margin & Margin Call The investor can keep his loan as long as his wants, provided the maintenance margin is not breached. maintenance margin Maintenance Margin is the minimum collateral value the investor must maintain against his borrowing before the brokerage will request for deposit of more funds or force sell the stock to pay down his loan.Maintenance Margin When this happens, it's known as a margin call.margin call Margin Calls are issued once the total collateral in the Margin Account falls below a minimum percentage of the total amount financed.Margin Calls

SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | 7 Margin Call A margin call must be met either by depositing additional cash, marginable shares or liquidation of shares. No new trades except for the liquidation of the existing positions will be allowed for the Margin Account once a margin call is made. The brokerage may grant the investor a few days grace to top up the margin required.

SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | 8 Margin Call & Force Selling For very serious margin call or force selling call, the investor must top up the margin within the same day.force selling call If the margin call is not satisfied within the stipulated time, the brokerage has the right to liquidate securities to cover the margin shortfall without notification.

SINGAPORE HONG KONG INDIA INDONESIA LONDON MALAYSIA NEW YORK PHILIPPINES TAIWAN THAILAND VIETNAM | 9 Risks of Margin Trading Margin is a high-risk strategy that can yield a huge profit if executed correctly. Because leverage amplifies the swings in prices then, by definition, it increases the risk of an investor’s portfolio. Buying on margin is the only stock-based investment where an investor stands to lose more money than he invested. A dive of 50% or more will cause him to lose more than 100%, with interest and commissions on top of that.