Hshares Index Options Launch Date : 14 June 2004

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H-shares Index Options Launch Date 14 June
2004
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Why Introduce H-shares Index Options?

• H-shares Index Futures have been actively traded
  since 8 Dec 2003. The introduction of H-shares
  Index Options will complement the trading of
  H-shares Index Futures.
• Since the launch of H-shares Index Futures market
  participants have requested HKEx to launch
  H-shares Index Options. This product can assist
  market participants to better manage their
  exposure in H-share portfolios.
• To meet the growing trading interest in the
  H-shares market and to deepen the liquidity of
  the underlying cash market and derivatives market.

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HKEx - Market for H-shares

• During the period Jul 1993 to Apr 2004, H-share
  companies raised more than 201 billion in Hong
  Kong.
• As of Apr 2004, there were 98 companies whose
  H-shares were listed on the Stock Exchange (66 on
  the Main Board and 32 on GEM).
• At the end of Apr 2004, there was a total of 55
  H-shares Index warrants from six issuers listed
  on the Stock Exchange.

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Investors Interest in H-shares

• Avg Daily Turnover
• 2002 581 Mil
• 2,041 Mil
• 2004 5,006 Mil
• 145 increase from 2003
• Jan Apr 2004

• Market Capitalisation (year end)
• 2002 132 Bil
• 408 Bil
• 333 Bil
• 30 Apr 2004

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H-shares Index Futures Actively Traded

• Underlying Index HSCEI (Hang Seng China
  Enterprises Index)
• H-shares Index Futures introduced on 8 Dec 2003.
• The total volume from Jan - Apr 2004 reached
  491,313 contracts and average daily volume was
  6,103 contracts.
• The volume and open interest set new records of
  23,670 contracts and 27,092 contracts on 27 Apr
  2004 and 28 Apr 2004 respectively.

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The Volume and Open Interest of H-shares Index
Futures(8 Dec 2003 30 Apr 2004)
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HSCEI Statistics and Characteristics

• Index Level
• - 3,897.08 (as of 10 May 2004)
• Market capitalisation of HSCEI
• - 296 billion (as of 10 May 2004)
• Average daily turnover (Jan - Apr 2004)
• - 3.9 billion, accounting for 24 of total
  equity turnover (Main Board and GEM)
• High Volatility (Q2 2003 Q1 2004)
• Good Return (Q2 2003 Q1 2004)

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Performance of HSCEI
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20-Day Annualised Volatility for HSCEI
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Recent Changes to HSCEI

• On 8 Mar 2004, six constituent stocks were added
  while one constituent stock was removed from the
  HSCEI.
• The number of constituents was increased from 32
  to 37 stocks.
• The HSCEIs market capitalisation rose from 319
  billion to 387 billion.
• The new constituents expanded the representation
  and industry coverage of the HSCEI.
• Stocks added
• China Life Insurance Co. Ltd.,
• PICC Property and Casualty Co. Ltd.,
• Great Wall Automobile Holding Co. Ltd.,
• AviChina Industry Technology Co. Ltd.,
• Weiqiao Textile Co. Ltd.,
• Fujian Zijin Mining Industry Co., Ltd.

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H-shares Index Options Contract Specifications

• Trading Symbol HHI
• Contract multiplier 50
• Minimum Fluctuation 1 index point
• Strike Interval 100 index points
• Contract months are the same as HSI Options -
  Spot Month, the next two calendar months, and the
  next three calendar quarterly months
• Exchange Fee 3.50
• Commission Negotiable

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Introduction of Four Additional Stock Options and
Futures

• Additional Stock Options and Futures on the
  following H-shares will also be introduced on 14
  June 2004
• China Petroleum Chemical Corporation
  (Sinopec)
• China Life Insurance Co. Ltd. (China Life)
• China Telecom Corporation Ltd. (China Telecom)
• Aluminum Corporation of China Ltd. (Chalco)
• To complement the trading in H-shares Index
  Options
• To offer trading and hedging instrument for
  H-shares
• The total number of stock options and futures
  will be increased to 37 and 36 respectively.
  There will be options and futures on six HSCEI
  constituents.

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Statistics of Sinopec, China Life, China Telecom
and Chalco
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Questions and Answers
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