1. Econ 310 Financial Institutions in Hong Kong Investment Bank – Merrill Lynch

2. The Nature of Investment Bank - intermediary that help corporations raise funds

3. Role of investment banks - underwrite the initial sale of stocks and bonds - a deal maker in mergers, acquisitions, and spin-offs - a middleman in the purchase and sale of companies - a private broker to the very wealthy

4. The revenue of investment banks - Commission - fee income - Spread - principal activities

5. Global investment banking revenue increased in to $52.8bn 2005. - This was up 14% on the previous year - The recovery resulted in an increase in M&A activity

6. The US was 51% of the total Europe (with Middle East and Africa) generated 31% of the total Asian countries generated the remaining 18%.

7. Well-known investment banking firms - Morgan Stanley - Merrill Lynch - Salomon brothers - First Boston Corporation - Goldman, Sachs.

8. The Background of Merrill Lynch 1914 - Charles E. Merrill & Co. opened for business at 7 Wall Street in New York City on January 6. A few months later, Edmund C. Lynch, joined him 1915 - The name was officially changed to Merrill Lynch & Co. in

9. 1941 – Merrill Lynch became the first company of announcing annual report at Wall street 1955 – It gained a underwriting contract of 100million in the first time 1960 and 1961 – It set up in London and Tokyo separately 1993 – It became the first securities firm of Beijing

10. - with offices in 37 countries and territories - total client assets of approximately $1.5 trillion - ranked No.34 in Fortune 500 from the April 17 th 2006 issue - topped Barron's annual "Top 100 Financial Advisers" again in April 2006, with the largest number on the list of any firm — 22

11. Two core businesses of Merrill Lynch - Global Private Client - Global Markets & Investment Banking Group

12. Services of Merrill Lynch Services of Merrill Lynch - Securities origination, brokerage, dealer and related activities - Investment banking - Securities clearance, settlement, equity financing and services, including prime brokerage - Wealth management products and services, including financial, retirement and generational planning - Banking, trust and lending services - Insurance and annuity products and annuity underwriting - Private equity and other principal investing activities - Global investment research - BlackRock

13. Major locations - New York City, New York, U.S., global headquarters - Jacksonville, Florida, U.S., corporate center, supporting North America operations - Hopewell, New Jersey U.S., corporate center, supporting North America operations - London, UK, European headquarters - Hong Kong, PRC - Tokyo, Japan

14. Other Services of Merrill Lynch Two global business - global private client - global markets

15. Global private client Main Services provided GPC business model Target Customers

16. Global private client Four main services of small and mid- sized businesses : - integrated cash management - flexible financing - retirement & benefits - personalized advice

17. Global private client Role of GPC Total MerrillSM Awards

18. Global Markets Services provided Fixed Income, Currencies and Commodities group (FICC) Global Equities Award

19. Performance of Merrill Lynch 2005 Financial Data Total Revenue : $ 26.0 billion USD Change : ↑18% Net Profit Margin : $ 5.1 billion USD Change : ↑15% Total Asset : $ 681 billion USD Change : ↑8.4%

20. Revenue from : - Asset management fees - Portfolio service fees - Commissions of Equities and Mutual Funds - Principal transactions - Underwriting - Strategic advisory

22. Key Event in 2006 -Merger Merrill Lynch Investment Managers with BlackRock, Inc. - 49.8% shareholding -more than $1 trillion in assets under management

26. Stock Performance of Merrill Lynch (MER)

27. Primary Sponsor （保薦人 ) of IPO Morgan Stanley : 凹凸科技 (457) 中國建材 (3323) 湖南有色 (2626) 世茂房地產 (813) 中煤能源 (1898) Goldman Sachs : 上海先進半導體 (3355) 中國銀行 (3988) 建滔積層板 (1888) 中國通信服務 (552) Merrill Lynch : - ICBC (1398) - 中國交通建設 (1800)

28. Case Study: ICBC

29. 210 hundred million US dollars ICBC will purchase in Hong Kong and Shanghai, distribute 483 hundred million for A shares and H shares Hong Kong release partially approximately composes for 3/4 ICBC can become the stock which goes on the market in Hong Kong and China.

30. Feburary,2006 ICBC gathers capital the amount 100 hundred million US dollars the bank choice goes on the market sells on consignment business certainly to have to enjoy a higher well-knowingness in the local capital market, and has a stronger comprehensive strength. the bank choice goes on the market sells on consignment business certainly to have to enjoy a higher well-knowingness in the local capital market, and has a stronger comprehensive strength.

31. March 2006 requested them to make the suggestion estimate and the detailed plan book

32. July 2006 ICBC incurs the stock price approximately 2.76 dollars ICBC incurs the stock price approximately 2.76 dollars the independence buyers should have 3,000 dollars

33. September 2006, ICBC in the preliminary of raising capital which submits to Securities and Futures Commission Securities and Futures CommissionSecurities and Futures Commission

34. the ICBC can distribute 130 hundred million of A shares, but H shares achieved 353 hundred million public shares are partial initially only accounts for 5%

35. The ICBC amounts between 180 to 210 hundred million US dollars ICBC of stock price possibly lies between 2.6 dollars to 3.05 dollars

36. On 27 of October, 2006 (1st Day) All independence buyer totaled gains approximately 16 hundred million dollars. ICBC of H shares receives nearly 15%, reports 3.52 dollars each independence buyers gain 319 dollar

38. ICBC Merrill set the right price Over subscribe exist Over subscribe exist

39. ICBC - 1 st day (opening) - 1 st day (opening) Share price $3.60 Share price $3.60 Higher than listing price ($3.07 $3.6) 17% ($3.07 $3.6) 17% $450/1000 share

40. ICBC China Merchants bank 24.9% Bank of China 15.3% ICBC 14.6% Bank of Communication 13.2% China Construction Bank 0%

41. ICBC - Professional’s expectation - Professional’s expectation Long term Long term - Trend is going upward (share price) - Trend is going upward (share price)

43. 日期開市最高最低收市成交量 調整收市價 * 2006-11-234.154.204.084.11605,236,9924.11 2006-11-224.024.144.024.13685,890,1124.13 2006-11-214.034.053.994.01357,018,9124.01 2006-11-203.974.053.954.01450,274,4964.01 2006-11-173.984.033.964.01593,172,9284.01 2006-11-164.054.143.974.031,049,694,9124.03 2006-11-153.884.023.884.001,160,173,0564.00 2006-11-143.823.933.803.871,464,082,3043.87 2006-11-133.643.783.633.771,197,494,6563.77 2006-11-103.653.673.623.651,055,038,7843.65 2006-11-093.563.643.563.63832,210,7523.63 2006-11-083.603.603.553.56508,204,1603.56 2006-11-073.633.643.593.61508,741,1523.61 2006-11-063.583.653.563.62952,751,4883.62 2006-11-033.513.633.503.582,051,865,8563.58 2006-11-023.493.513.483.50512,928,0323.50 2006-11-013.483.523.473.49984,243,8403.49 2006-10-313.483.493.453.482,253,748,2243.48

44. Competitors

45. Short term Great competition in local market 1.58 banks providing investment banks’ services 2. many choices to choose underwriting IPO e.g. ICBC case e.g. ICBC case

46. Competitors local banks are expanding their business to different categories, e.g. HSBC

47. Competitors 1. Commercial bank – the Hongkong and Shanghai banking co-operation 2. Investment Banking -- HSBC Investment (Hong Kong) Limited 3. Insurance 4. Leasing, Finance and Factoring 5. HSBC Securities Services 6. Global Payments and Cash Management 7. Trade Services 8. Corporate, Investment Banking and Markets 9. Property Services 10. Shipping

48. Competitors Long term Merrill is not a local I-bank, cannot share the benefit of CEPA Competitors doing more advanced Market predicted is negative to Merrill Market predicted is negative to Merrill

49. Conclusion

50. The End Group members Ng Sin Kwan 043057 Chiu Pui Ming Stephanie 055012 Or Chung Ching 035165 Lai Man Yan 043012 Fan Man Kit 043022 Wong Ping Yiu, Brian 043195