1. Hong Kong as the International Financial Centre in Asia: Ways Forward Prof. Stephen Cheung City University of Hong Kong

2. Contents Balance growth of financial markets Quality markets

3. Financial Market Development Equity market –From 8 th in 2005 to 6 th in 2006 –Capital raised in 2006 Bond market –RMB dominated bonds –Asian Bond Funds

4. 10 Largest Domestic Equity Market Capitalization at year-end 2006 and 2005 Source: World Federation of Exchanges 2006 Market Highlights

5. Capital Raised in 2006 By Share Issues (in million of USD) By Bond Issuance (in million of USD) Australian SE47,042.3N/A Hong Kong Exchange65,015.88,351.9 Jakarta SE1,823.1N/A Korea Exchange5,281.3400,667.9 New Zealand Exchange1,014.91,504.5 Shanghai SE16,760.5N/A Shenzhen SE5,977.71,548.1 Singapore SE5747.0115,766.6 Thailand SE3227.992,460.5 Tokyo SEN/A Nasdaq17,374.9N/A NYSE102,274.6N/A London SE95,203.9560,450.3 Luxembourg SE35,209.81,320,246.1 Source: Focus January 2007, World Federations of Exchanges

6. Quality Market Listed companies Regulators Financial intermediaries

7. Corporate Governance Regional Comparison Comparison among listed companies in Hong Kong

8. Corporate Governance Quality Index Source: World Economic Outlook, September 2006

9. Year 2005 Sample –Use 5 OECD principles as benchmark –Four main Hong Kong indices constituents as of 12/31/2005 HSI, HSCCI, HSCEI, HSHKCI –Totally 174 listed companies in Hong Kong

10. Improvement of CGI Compared with 2002 Mean of CGI increased by 16.14% compared with year 2002. ImprovementFrequency -6-010 0-523 5-1040 10-1536 15-2018 >206

11. Improvement of CGI by Sections A.Rights of shareholders B.Equity of shareholders C.Role of stakeholders D.Disclosure and transparency E.Board responsibilities

12. Opportunities Quality Market –Better investor protection –Better liquidity –More quality companies Enhance the corporate governance of listed companies in China Toward the international financial centre in Asia