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FTSE/Xinhua China 25 Index (FXI China 25) Futures & Options Launch Date: 23rd May 2005

FTSE/Xinhua China 25 Index (FXI China 25) Futures & Options Launch Date: 23rd May 2005. HKEx Corporate Mission. The mission of HKEx is to operate a world-class marketplace for Hong Kong and Mainland China securities and derivatives products. HKEx – The Largest International Capital

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FTSE/Xinhua China 25 Index (FXI China 25) Futures & Options Launch Date: 23rd May 2005

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  1. FTSE/Xinhua China 25 Index (FXI China 25) Futures & Options Launch Date: 23rd May 2005

  2. HKEx Corporate Mission The mission of HKEx is to operate a world-class marketplace for Hong Kong and Mainland China securities and derivatives products.

  3. HKEx – The Largest International Capital Formation & Trading Centre for Mainland Enterprises

  4. HKEx – The Trading Centre for Mainland Enterprise Derivatives • H-shares Index Futures • H-shares Index Options • 16 Stock Options / Futures on Mainland enterprises: • 6 on individual H-shares • 10 on individual Red-chips • FXI China 25 Futures & Options

  5. Why FXI China 25 Index Futures & Options? • To expand product offerings to meet market demand for derivatives products on Mainland enterprises listed in Hong Kong • To complement H-shares index futures and options trading

  6. Why FXI China 25 is chosen for trading? • Broad-based index covering both H-shares and Red-chips suitable for derivatives trading, hedging and arbitrage • Constituent stocks restricted to 25 most liquid shares of Mainland enterprises listed in Hong Kong • The weighting of each constituent stock is capped to maintain a balanced composition – meets regulatory requirements • Widely recognised by OTC structured products issuers with US$3 billion of OTC products referenced to FXI China 25

  7. FXI China 25 Index Performance vs. HSI FXI China 25 has out-performed the Hang Seng Index (from Jan 2003 to Mar 2005)

  8. FXI China 25 Index 20-Days Annualised Volatility vs. HSI FXI China 25 has higher volatility than the Hang Seng Index (from Jan 2003 to Mar 2005)

  9. FXI China 25 Summary Statistics • Index Level* : 8,254.83 • Investible Market Cap* : HK$416.87 billion • Average Daily Turnover# : HK$4.31 billion • of constituent stocks in HK • 20-day Annualised* : 15% (vs. HSI 11%) • Historical Volatility • Index Return# : 85.4% (vs. HSI 57.2%) * As of 31 Mar 2005 # from 1 Apr 2003 to 31 Mar 2005

  10. FXI China 25 Index Top 10 Constituents • TickerCompany NameType Weighting* • 941 China Mobile Red-chip 9.99% • 857 PetroChina H-share 9.05% • 2388 BOC Hong Kong (Holdings) Red-chip 8.12% • 386 China Petroleum & Chemical H-share 6.88% • 883 CNOOC Red-chip 5.93% • CITIC Pacific Red-chip 4.05% • 2628 China Life Insurance H-share 4.05% • 2318 Ping An Insurance H-share 4.01% • 1199 COSCO Pacific Red-chip 4.01% • 902 Huaneng Power International H-share 3.99% *weighting as of 18 April 2005

  11. FXI China 25 Index Futures Summary Trading Symbol : FXC Contract Multiplier : HK$50 Contract Value is around* : HK$412,742 (vs. HK$675,844 for Hang Seng Index Futures and HK$239,639 for H-shares Index Futures) Minimum Fluctuation : 1 index point Contract Months : Spot, the next calendar month, and the next two calendar quarter months Exchange Fee : HK$5.00 Settlement Fee : HK$5.00 Commission : Negotiable *contracted value based on 31 Mar 2005 closing

  12. Features of FXI China 25 Futures and Options • Fully Automated Trading & Integrated Clearing • Low Transaction Costs • PRiME Margining System • Hedging Vehicle • Arbitrage Opportunities • Spread Trading with H-shares Products • Dynamic Options Strategies • 

  13. Waiver and Exemption 3-month Waiver after launch ! • Exchange Fee • $5.00 / contract: • SFC Levy • $1.00 / contract: 6-month Exemption after launch !

  14. Joint Promotion Programmes • Index Promotion Program sponsored by FXI • - Index guessing games • - Radio broadcast of FXI China 25 Index • Investment Event on 21 May 2005to be sponsored by HKEx, sponsoring Exchange Participants and others • - Exhibitions and seminars (covering 1,200 people)

  15. Education & Communication Programme • HKEx will conduct the following education programme • Continuous Professional Training courses for practitioners • Briefings for Exchange Participants • Seminars for professional bodies • Public seminars for investing public

  16. Questions & Answers

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