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Update on HKEx’s Latest Developments

Mr Paul ChowHKEx Chief Executive

8 July 2003

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Development Strategy

The key international capital market for Mainland and Hong Kong enterprises;

The Asian time-zone pillar in the global securities and futures markets;

The preferred Asian partner for major equities and derivatives exchanges seeking to build global alliances.

HKEx is committed to reinforcing and developing the Hong Kong markets as:

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Development Strategy

Assist Mainland enterprises and investors in moving into the international market;

Establish a rating mechanism appropriate for the region and develop a new rating service industry in the region;

Become the most important investment and fund management centre in the Asian time zone where analysts assemble; and

Integrate with the Shanghai and Shenzhen markets upon full convertibility of renminbi to develop into Asia’s biggest financial market.

In the longer term, HKEx will join with other financial institutions and professionals to work towards the following objectives:

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Strengthened Corporate Structure

Main structural changes involved the Exchange Business Unit and the Listing, Regulation and Risk Management Unit which was renamed the Listing Unit;

Streamlining resulted in some redeployment and redundancies;

Corporate restructuring has been completed but workflow review continues;

Staff salaries continue to be reviewed annually based on individual performance.

Corporate structure was revised in June to strengthen operational efficiency:

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Revised Corporate StructureChief Executive

Paul Chow

Chief Operating OfficerPatrick Conroy

Chief Operating Officer

E-Business & Information Services

Roger LeeHead - E-Business & Information Services

IT/SystemsStephen Law

Head - IT/Systems

Listing

Richard WilliamsHead - Listing

China Development & Listing Promotion

Cash Market Development & Operations

Derivatives Market Development & Operations

Participants Admission & Surveillance

Corporate Finance

Expert Department

Regulatory Discipline

Legal & Secretarial Services

Mary KaoHead - Legal &

Secretarial Services

Corporate Communications

Henry LawHead - Corporate Communications

Internal AuditCoven Hui

Head - Internal Audit

Research & PlanningMatthew HarrisonHead - Research &

Planning

Human ResourcesBrenda Yen

Head - Human Resources

Finance, Treasury, Administration & Risk

ManagementKaren Lee

Chief Financial Officer

Finance

Treasury

Administration

Risk Management

ExchangeLawrence FokDeputy Chief

Operating OfficerHead - Exchange

ClearingWalter Reisch

Head - Clearing

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Looking Ahead

Listing Matters: The Government’s consultation on the listing regime; Amendments to Listing Rules relating to corporate

governance issues; Conclusions on the consultation on proposed

amendments to Listing Rules regarding sponsor regulation; and

Conclusions on the consultation on initial and continuous listing eligibility criteria and delisting mechanism

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Looking Ahead

Market Facilities: Upgrade of HKATS to OM 17.1 Integration of derivatives clearing Enhancement of Investor Account in CCASS Third Party Clearing Scripless market model Consolidation of clearing houses Consultation on narrowing minimum spreads

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Looking Ahead

Development of Products and Services: Exploration of new financial products and review of

existing products Development of energy derivatives Capital Protected Instruments Equity Linked Instruments Regional Exchange Traded Funds Stock Options Interest Rate Swap Futures

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Market Highlights

Market Statistics (as of 30 June 2003) Main Board GEM

Number of listed companies 824 175

Newly listed companies this year 16 12

Average daily turnover this year 6,956 mil 103 mil

Market capitalisation 3,907,287 mil 60,965 mil

Price earnings ratio 13.90 28.13

IPO funds raised this year 6,541 mil 577 mil

Number of H share companies 58 22

Number of Red Chip companies 71 1

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Market Highlights2003 (Jan – Jun) 2002

*contract size increased by 5 times from 27 May 2002

Total Turnover Volume

Average Daily Volume

Total Turnover Volume

Average Daily Volume

Hang Seng Index Futures

2,996,057 24,761 4,802,422 19,602

Mini-Hang Seng Index Futures

564,016 4,661 1,107,964 4,522

HSI Options 1,111,397 9,185 1,070,405 4,369

3-Month HIBOR Futures*

24,729 204 280,257 1,144

1-Month HIBOR Futures*

50 0 970 4

Stock Options 1,768,279 14,614 3,724,705 15,203

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Thank you