1. IPO in China --Not a must win game anymore Presented by: Di ZHANG

2. Brief Introduction SHSE, SZSE opened in 1990 Limited trading style, No short, no hedge Very small QFII, mostly domestic investors Young, Energetic, Protected, Problematic Number of Stocks Total Capital (Trillion RMB) Daily Trading volume (Billion RMB) SHSE93216.5150 SZSE9705.5100

3. Existing problem IPO : Universally underpricing, especially in China Huge gap between Primary Market & Secondary Market From 2000 till nowFirst day returnFirst 7 trading day Shanghai118%113% Hong Kong21%23%

4. Comparison Rate of registryRate of return 7-day bank depositAnnual Interest 1.35% 100%1.35*7/365=0.026% IPOAverage First day return 118% 0.5%118%*0.5%=0.59% Return of registering IPO = 22.7 times of return of putting money in banks

5. Government policy Price Limit Cap: P/E < 20 Crazy first trading day (X) Free IPO pricing, 20 P/E limit cancelled Over-raised capital, P/E ratio over 50 (X)

6. JuneJulyAugustSeptemb er OctoberNovemb er Decemb er IPO issued 161418251235 Tight Monetary Policy High Demand of capital for IPO Lower P/E, Lower first day return

7. GEM (Growth Enterprise Market) First Pack IPOSecond Pack IPO Third Pack IPOFourth Pack IPO First day return (%) 10645.2131.9822.97 First day return negative appeared The free lunch never exist

8. FUTURE More stable market More diversified products More educated investors More efficient market