FTSE/Xinhua China 25 Index (FXI China 25)

Futures & Options

Launch Date: 23rd May 2005

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HKEx Corporate Mission

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

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

 For the year 2004 Market total

Mainland Enterprises

Total As % of total market

Listed companies(As at end of Dec 2004)

1,096 304 27.7%

Number of New Listings 70 44 63%

Market capitalisation (As at end of Dec 2004)

HK$6,965billion

HK$2,020 billion

30.2%

Funds raised by IPOs HK$97.5 billion

HK$76.4 billion

78.9%

Average daily turnover HK$13.7billion

HK$6.7 billion

49%

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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

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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

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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

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FXI China 25 Index Performance vs. HSI

FXI China 25 has out-performed the Hang Seng Index (from Jan 2003 to Mar 2005)

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FTSE Xinhua China 25 Index

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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)

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FTSE Xinhua China 25 Index

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FXI China 25 Summary Statistics

• Index Level* : 8,254.83

• Investible Market Cap* : HK$416.87 billion

• Average Daily Turnover# : HK$4.31 billionof 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

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FXI China 25 Index Top 10 Constituents

Ticker Company Name Type 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%267 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

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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

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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

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Waiver and Exemption

Exchange Fee$5.00 / contract:

SFC Levy$1.00 / contract:

3-month Waiver after launch !

3-month Waiver after launch !

6-month Exemption after launch !

6-month Exemption after launch !

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Joint Promotion Programmes

• Index Promotion Program sponsored by FXI

- Index guessing games - Radio broadcast of FXI China 25 Index

• Investment Event on 21 May 2005 to be sponsored by HKEx, sponsoring Exchange Participants and others

- Exhibitions and seminars (covering 1,200 people)

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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

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Questions & Answers