HKEX – THE LISTING VENUE OF

CHOICE FOR INTERNATIONAL

COMPANIES

April 2016

Michael Chan

Senior Vice President

Client & Marketing Services

2

2

1 Listing in HKEX

Key Drivers of China Story from Hong Kong Perspective

Agenda

3

New Listings between 2012 - 2015

by Number of Deals

Robust Listing Activities

USD 33.5 billion raised with 138 listings in 2015

Source: HKEX (as of 31 Dec 2015)

New Listings between 2012 - 2015

by Funds Raised

47

64

33

110

76

122

13 17

28 33

38 51 69

75 84

100

113

138

0

20

40

60

80

100

120

140

160

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Number of listings

2012 2013 2014 2015

5.5

11.5

5.8

21.7

13.6

29.2

0.3 0.3 2.4 7.1

7.4

16.6 18.4

20.0 20.0

25.2

28.1

33.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Funds Raised (US$bn)

2012 2013 2014 2015

4

Strong IPO and Post-IPO Fund Raising Capability

Top 1 globally for IPO fund-raising and top 3 globally for post-IPO fund-raising

Source: HKEX, Dealogic, WFE (as of 31 Dec 2015)

2015 Global Ranking in IPO Fund-raising

HKEX achieved top 5 place globally for 14 consecutive years

# Exchanges YTD Funds Raised

(US$bn)

1 Hong Kong (HKEX) 33.50

2 New York (NYSE) 19.61

3 NASDAQ 18.01

4 London (LSE) 17.22

5 Shanghai (SSE) 16.98

6 Tokyo 15.21

7 Madrid (MADX) 9.43

8 Deutsche Borse 7.84

9 Shenzhen (SZSE) 7.72

10 Amsterdam (Euronext) 7.71

2015 Global Ranking in Post-IPO Fund-raising

# Exchanges YTD Funds Raised

(US$bn)

1 Shanghai (SSE) 122.25

2 New York (NYSE) 117.35

3 Hong Kong (HKEX) 108.67

4 Shenzhen (SZSE) 98.43

5 Euronext 88.01

6 NASDAQ 63.98

7 Switzerland (SIX) 52.37

8 Australia (ASX) 41.78

9 London (LSE) 41.17

10 Canada (TMX) 39.16

5

Strong IPO and Post-IPO Fund Raising Capability

Top 1 globally for IPO and post-IPO fund-raising combined

Source: HKEX, WFE (as of 31 Dec 2015)

HKEX achieved top 5 place globally for 14 consecutive years

34

18 18 10

19 13 21

3 8 9

109

122 117

98 88

64 41

52 42 37

-

20

40

60

80

100

120

140

160

Hong Kong(HKEX)

Shanghai(SSE)

New York(NYSE)

Shenzhen(SZSE)

Euronext NASDAQ London(LSE)

Switzerland(SIX)

Australia(ASX)

SpanishExchanges

(BME)

US

D b

n

IPO Funds Raised Post-IPO Funds Raised

6

A Platform to Support Long-term Fund-raising Needs in a Flexible Way

Source: HKEX (as of 31 Dec 2015)

HKEX IPO and Post-IPO numbers consistently show its ability to raise funds even during 2008 Financial Crisis (Post-

IPO funds raised up to $46 billion USD)

8 15

28

36 38

67

75

54

82

110

62

39

48

120

142

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

76%

52 Follow-on 5 8 20 24 17 24 38 46 50 29

40% 47% 28% 34%

55%

64% 50%

15%

39%

53%

60% 53%

72% 66%

45%

36% 50%

85%

61%

47%

53%

47%

(US

$ b

n)

IPO and Post-IPO Funds Raised

58 IPO 3 7 8 12 21 43 37 8 32 33

31%

69%

27

12

56%

44%

27

21

■ 6 Months: Allowed time after initial listing for follow-on / secondary issues of shares or convertible securities

■ One Day: Completion driven by market demand

91

29

24% 24%

76%

109

34

7

Competitive Advantages for International Listings on HKEX

Key Drivers for International Listings

Asia / China

Nexus

Alignment of

Issuers’ Growth

Drivers and

Shareholders

Diversified

and Global

Investor Base

Transparent and

Efficient Listing

Regime

Critical Mass of

World’s Leading

Brand Names

8

HKEX Attracts Listed Companies of All Sizes

Source: HKEX (as of 31 Dec 2015)

Number of Companies by Sector

All Listed Companies Distribution

53

345

1216

216

0 500 1000 1500

> USD10bn

USD1-10bn

USD0.1-1bn

< USD0.1bn

Mark

et C

apitalis

ation

Number of Listed Companies

Distribution of Companies Listed

Market Cap. Main Board GEM

< USD0.1 billion 7.2% 46.5%

USD0.1 – 1 billion 68.6% 50.2%

USD1 – 10 billion 20.9% 3.3%

>= USD10 billion 3.3% 0.0%

Conglomerates, 14

Consumer Goods &

Services, 655

Energy, 77

Financials, 156 Industrials, 226

Information Technology, 185

Materials, 151

Properties & Construction ,

272

Telecom, 18

Utilities, 54

■ Total listed companies of 1,830

■ The number of Consumer Goods and Services companies are on the rise accounting for 36% of total listed companies

■ Traditional sectors (Properties & Construction and

Industrials) as well as new growth sectors (Information Technology) are well represented in the market

Sectors by Number of Companies

9

Trading Value Distribution of Overseas Investors

Diverse and Growing Global Investor Base

HKEX enables access to critical mass of international institutional investor base and also Asian and Mainland Chinese investor base

Note: Numbers may not add up to 100% due to rounding

Source: HKEX Cash Market Transaction Survey 2014/2015

Trading Value Distribution by Investor Type

Exchange Participants' Principal

Trading 22%

Local Retail

Investors 20%

Local Institutional Investors

19%

Overseas Retail

Investors 8%

Overseas Institutional Investors

31%

US, 23%

UK, 27%

Europe (Excl. UK),

8%

Japan, 1%

Mainland China, 22%

Taiwan, 2%

Singapore, 8%

Rest of Asia, 3%

Australia, 1%

Others, 7%

Mainland Chinese investor exposure drives growth and synergy with international investor base participating in

HKEX markets

10

59.7

Case Study – IMAX China Holding, Inc.

Source: HKEX (as of 29 Jan 2016)

Successful realization of valuation potential via spinning-off of China subsidiary

■ Listing Date: 8 October 2015

■ IPO Funds Raised: HKD2,210 m (US$283 m)

■ IPO Price: HKD 31

■ Trading Turnover Oct 2015 – Jan 2016:

HKD4,008 m (US$514 m)

■ Market Cap at listing: HKD11,015 m (US$1,412 m)

■ P/E Ratio at listing: 62.9x

IMAX China IPO Statistics

30

35

40

45

50

55

60

08/10/2015 08/11/2015 08/12/2015 08/01/2016

Share Price Changes (8 Oct 2015 – 29 Jan 2016) (HKD)

100.2

38.6

0

20

40

60

80

100

120

IMAX China IMAX Corporation (ParentCompany)

Price/Earnings Ratio as at 29 Jan 2016■ Strong post-listing performance (Oct 2015 – Jan 2016)

IMAX China price +42.77% (highest +92.58%)

Hang Seng Index -11.94%

■ Shareholders’ value enhanced as fast-growing China

business sees valuation 2.6 times higher than that of

US parent holding

59.7

49.4

11

Listing Process

An issuer

decides to list

on HKEX

Appointment of

sponsors,

lawyers,

accountants

& other

professional

advisors

Restructuring,

preparation of

accountants’

report,

drafting of

prospectus

Sponsor

submits listing

application &

related

documents

to the Listing

Division of HKEX

Roadshow to

promote shares to

investors

before trading

commences Hearing by

Listing

Committee

Review of listing

application by the

Listing Division

Review and approval of

listing application

by the Listing Division

GEM Main

Board

Average Time:

5-8 weeks

12

Key Main Board Listing Requirements

Financial Requirements

To fulfill any one of the following tests:

1. Profits Test

■ Net profit of latest year ≥ USD2.6 m

■ Net profit of two preceding years ≥ USD3.8 m

(in aggregate)

■ Market cap ≥ USD25.6 m

2. Market Cap / Revenue Test

■ Market cap ≥ USD513 m

■ Revenue of the most recent audited year ≥ USD64 m

3. Market Cap / Revenue / Cashflow Test

■ Market cap ≥ USD256 m

■ Revenue of most recent audited financial year

≥ USD64 m

■ Aggregate positive cash flow for 3 preceding

financial years ≥ USD13 m

Control and Management

■ Ownership continuity and control for at least the most

recent financial year

■ Management continuity for at least 3 years

Public Float

■ Minimum of 25%

■ If market cap ≥ USD1,282 m, public float can be

lowered to 15%

■ Minimum of 300 shareholders

Professional Advisers

■ Must appoint a sponsor for listing

■ Public offer tranche must be fully underwritten by

underwriters

■ Must appoint a compliance adviser for the period

from listing date to end of publication of financial

results for

1st full financial year after listing

13

Key GEM (Growth Enterprise Market) Listing Requirements

Financial Requirements

To fulfill the following criteria:

Market Cap / Operating Cash Flow Test

■ Market cap ≥ USD13m (HKD100m)

■ Operating cash ≥ USD2.6m (HKD20m) in aggregate

for latest 2 full financial years

Public Float

■ Minimum of 25%

■ If market cap ≥ USD1,282 m, public float can be

lowered to 15%

■ Minimum of 100 shareholders

Professional Advisors

■ Must appoint a sponsor for listing

■ Must appoint a compliance adviser for the period

from listing date to end of publication of financial

results for

1st full financial year after listing

■ A trading record period of at least 2 full financial years

■ Management continuity for at least the 2 preceding

financial years

■ A continuity of ownership and control throughout the

full financial year immediately preceding the issue of

the listing document

Operating History and Management

■ Enhance time and cost efficiency – the power to

approve admission of new issuers will be delegated

from the GEM Listing Committee to the Listing

Division

■ A streamlined transfer process to Main Board Listing

– no need to appoint sponsor or financial advisor, no

need to produce a prospectus or listing document

only an announcement and application form would

suffice

14

2

1 Listing in HKEX

Key Drivers of China Story from Hong Kong Perspective

Agenda

15

HKEX Building Investor Base – China Long-term Strategy

China’s emerging market growth potential and prospect drives HKEX listing to attract strategic investors at different

stages in fund raising

Pre-IPO Investors

Cornerstone Investors

Post-IPO Investors

IPO and Post-IPO Fund Raising Capabilities

16

Key Drivers of Hong Kong Exchange Strategy

Redeployment of Mainland wealth into

capital markets

Increasing international participation in

Mainland capital markets

2 1

Rising Mainland outbound capital

markets investment

Hong Kong’s unique position as a

mutual price discovery venue

4 3

17

-

100

200

300

400

500

600

700

800

900

1,000

2007

2008

2009

2010

2011

2012

2013

2014

2015

3 Year CAGR of all bonds: 81%

3 Year CAGR of RMB bonds: 123%

-

50

100

150

200

250

300

350

400

450

500

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Total Funds Raised (HK$ bn)

How important is

China Capital Account

Opening to Hong

Kong?

Source: HKEX (as of 30 Nov 2015)

Hong Kong Market (HKEX) has a Strong China Story

IPO Fund Raising Story Tremendous Growth of Market Cap

ADT Driven Growth for HKEX

-

5.0

10.0

15.0

20.0

25.0

30.0

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Market Cap of HKEX Markets (HK$ tn)

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Non-China China

ADT (HK$ bn)

Fixed Income Driven Growth for HKEX

Total Amount Issued (HK$ bn)

Non-China China Non-China China

Non-China China

How important is China Capital Account Opening to Hong Kong?

18

Trading Velocity (% Terms)

“China Story” for Domestic Mainland market

Source: WFE & HKEX as of 31 January 2016, ADT and Velocity figures of HKEX include ETF products but excludes warrants

Total Market Average Daily Turnover (ADT)

45.1

84.4

133.9 134.8

157.7

113.2

80.7

44.4

59.6 69.0

48.7

33.2

6.1 8.5 20.6

14.2 12.9 12.1 8.6 7.1 6.7 6.6 5.3 6.9

0

20

40

60

80

100

120

140

160

180

Feb2015

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2016

Equ

itie

s A

DT

(US$

bn

)

Shanghai StockExchange

HKEX

195

464

600

546

697

645

492

270 277

390

295 228

37 62

113 78 88 89

67 54 47 50 42 56

0

100

200

300

400

500

600

700

800

Feb2015

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2016

Ve

loci

ty (

%)

Shanghai StockExchange

HKEX

HKEX SHSE

• Market Cap US$ 3.5 trillion

• 80% Retail Investor Composition

• No Day Trading Allowed

• T+0 Trade Settlement

• Market Cap US$ 2.9 trillion (62% Chinese

Companies)

• 78% Institutional Investor Composition

• Day Trading Allowed

• T+2 Trade Settlement

Shanghai Stock Exchange market demonstrates strong domestic trading power that can flow into HKEX market

through southbound over time

19

= YTD average velocity = L1M velocity

Comparison of Trading Activity Across Global Exchanges

Source: WFE, as of 31 January 2016

99.5

55.8

4.5 2.0

14.0 8.4 6.2

33.2

49.3

6.9

26.1

7.1 3.0 2.6 2.1 0.8

NASDAQ BATS BM&F ENX SSE HKEx KRX NSE India SGX

66%

57%

62%

4

119%

6

186%3

110%3

71%

75%

445%

89%

228%

56% 137%

46% 69% 69%

45%

YTD ADT1 & Velocity2 of Major Global Exchanges (US$ billion)

228%

445%

56%

Notes: 1. All figures are based on single counter data from WFE

2. All figures are based on single counter data from WFE. Nasdaq and NYSE data are calculated internally based on WFE’s definition

3. The data of Nasdaq and NYSE include trades executed on their trading platforms for stocks listed on other exchanges

4. Figures of BATS are based on data from its official website and WFE

5. YTD ADT and Velocity figures include ETF products but excludes warrants

6. Data as of 31 December 2015

HKEX has the potential to substantially increase velocity as China opens its capital account

NYSE TMX LSE Deutsche SZSE TSE ASX TWSE

20

Key Features of Shanghai-Hong Kong Stock Connect

Note: Only eligible Mainland investors can participate in Southbound trading

To achieve maximum market efficiency with minimum systemic risks

Closed Loop Cross-Boundary Fund Flow to

Achieve Stringent Risk Management

Order Routing in Gross for

Maximum Price Discovery

Clearing and Settlement in Net for

Minimum Cross-boundary Fund Flow

“Home Market” Rules and Laws Apply

to the Extent Possible

All RMB Conversion in HK,

Facilitating Offset of Currency Conversion

Reciprocal Structure for Alignment of Interest

Quota Applied for Smooth and Stable Launch

Scalable in Size, Scope and Market

in the Future

Equal Revenue Sharing to

Achieve Win-win Solution

Hong Kong Shares

A Shares

Order

Routing

Cle

ari

ng

Lin

k

SSE

SEHK

So

uth

bo

un

d

Eligible Shares

ChinaClear

No

rthb

ou

nd

Cle

arin

g L

ink

SEHK

Subsidiary

SSE

Subsidiary

Order

Routing

HKSCC

Eligible Shares

EPs/CPs

Mainland

Hong Kong

SSE Members/

ChinaClear

Participants

HK & overseas

investors

Mainland

investors*

CSRC

SFC

Re

gu

lato

ry C

oo

pera

tio

n E

nfo

rce

me

nt C

oo

pera

tion

21

Client & Marketing Services

Market Development Division

Hong Kong Exchanges and Clearing Limited

Add. : 10/F One International Finance Centre

1 Harbour View Street, Central, Hong Kong

Email : im@hkex.com.hk

HKEX Group Website: www.hkexgroup.com

HKEXnews Website: www.hkexnews.hk

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