1. 11577230_1 RMB AND ASSET MANAGEMENT 1 August 2013 KING & WOOD MALLESONS FINANCIAL SERVICES COUNCIL CONFERENCE 2013

2. www.kwm.com | ASSET MANAGEMENT / STRUCTURED CREDIT - THE LANDSCAPE 2 Securitisation Secondary market Capital markets Notes Bonds Leasing Mezzanine REITs CMBS Corp borrowers Real property Local Gov … financing Bank loan Investors Retail HNWIs Institutional Special depositor Deposit Structured deposit Wealth management programs Cash pool Asset pool proprietary Asset management plans Securities firms Fund managers Insurance companies Trust companies Banks Licensed investments

3. www.kwm.com | 3 ASSET MANAGEMENT / STRUCTURED CREDIT - DEREGULATION Retail investors Investment term mismatch, hence asset / capital pool Implicit guarantee from asset managers Not in form of investment fund but rather project based plans / programs Regulatory arbitrage and no real money investors Institutional investors Insurance companies Asset / fund managers (banks/ trust / fund / securities firms) QDII and QDII2 Private and public market products Bank lending centric Asset origination “Asset backed securities” issuance

4. www.kwm.com | RMB INTERNATIONALIZATION – OFFSHORE FINANCING BACKED BY CHINA ASSETS 4 Chinese corporate Hong Kong investment / financing vehicle offshore onshore collaterals Outbound Offshore financiers / investors Onshore banks Investors Targets Foreign investment companies Operating assets Guarantee / security financing Outbound SBLCs Hong Kong Co Inbound Operating assets

5. www.kwm.com | 5 Chinese regulators SAFE (The State Administration of Foreign Exchange) PBOC (The People’s Bank of China) NDRC (The National Development and Reform Commission) MOFCOM (The Ministry of Commerce) Different agenda for different regulators Outbound vs. inbound Short term vs. mid-long term Corporate vs. individual Foreign companies vs. Chinese domestic companies Foreign direct investments vs. foreign investments in securities / capital markets / financial products RMB INTERNATIONALIZATION – OFFSHORE FINANCING BACKED BY CHINA ASSETS

6. www.kwm.com | 6 RMB INTERNATIONALIZATION – RQFII 2011 RQFII scheme established initial investment quota of RMB20bn 2011 RQFII scheme established initial investment quota of RMB20bn April 2012 Additional RMB50bn quota for the launch of RQFII A-share ETFs April 2012 Additional RMB50bn quota for the launch of RQFII A-share ETFs late 2012 investment quota expanded to RMB270bn late 2012 investment quota expanded to RMB270bn 2013 RQFII rules revised 2013 RQFII rules revised KEY MILESTONESKEY CHANGES UNDER THE 2013 REVISED RQFII RULES the scope of eligible applicants has been expanded  Hong Kong subsidiaries of:  Chinese fund management companies  Chinese securities companies  Chinese commercial banks  Chinese insurance companies  financial institutions that are registered in Hong Kong and with principal places of business in Hong Kong no more restriction on asset allocation the scope of permitted investment has been expanded:  stocks, bonds and warrants traded or transferred on the Shanghai or Shenzhen Stock Exchange  fixed income products traded in the inter-bank bond market  securities investment fund  stock index futures  other financial instruments approved by CSRC from time to time different requirements for open-ended funds separate designated accounts for different tradings

7. www.kwm.com | 7 PROPOSED MUTUAL RECOGNITION OF FUNDS BETWEEN HONG KONG AND THE MAINLAND Announced by SFC in January 2013 Purpose of the mutual recognition scheme: qualified SFC-authorised funds domiciled in, and operating from, Hong Kong will enjoy the status of “recognised Hong Kong funds”; and qualified Mainland funds will enjoy the status of “recognised Mainland funds these recognised funds can then obtain authorisation and be sold directly in the other's market Working group of representatives from SFC, CSRC and the Asset Management Association of China Key issues to be resolved relate to: investor protection rules; application of the foreign exchange controls under the current capital control rules; and the precise approval criteria to be adopted for the authorisation process in both Hong Kong and the Mainland. Expected to be launched by end of 2013

8. www.kwm.com | 8 -Chinese fund managers and insurance companies starting to look abroad -Outbound investments for Chinese corporate investors, paring with financial sponsors -Offshore assets of Chinese financiers to be offloaded -Cross-border RMB/CNH capital markets transactions -Australian export of fund management capabilities OPPORTUNITIES FOR FOREIGN FUND MANAGERS

9. www.kwm.com | SCOTT GARDINER Managing Partner Energy Resources & Projects China Sydney T +61292962158 scott.gardiner@au.kwm.com ROY ZHANG Partner Shanghai / Hong Kong T +8621-24126278 / +852- 34438538 roy.zhang@hk.kwm.com Scott is leading King & Wood Mallesons’ charge as the major legal player in Asia-Pacific– as Managing Partner for the China and Energy, Resources, Projects teams, he is rated one of Australia's top lawyers. He’s on landmark transactions and projects including Alinta Energy Deleveraging (“work out deal of the year” 2 years in succession), at the forefront of the solar and wind farm industries and paving the way into China (the $10billion share purchase by Sinopec). Mr. Roy Zhang specializes in banking, project and structured finance, and the mergers and acquisitions of financial institutions. Roy has extensive experience in advising major international financial institutions in the PRC, international and local developers and sponsors, equity investors, local commercial banks, trusts and investment companies; on financial service regulatory issues, mergers and acquisitions, debt and corporate restructurings, projects, syndicated lending, structured finance, derivatives, and structured products. 9 QUESTIONS? PLEASE CONTACT