Advantages of Listing in Hong Kong

Once a company has decided to pursue a listing, it must also consider a suitable market
on which to list its shares. In this connection, some of Hong Kong's advantages as a
listing venue are set out below:

Gateway to Mainland China

With close trading and business links to other Asian economies, Hong Kong is
strategically placed in a high growth region. As an internationally recognized
financial centre with an abundance of professional expertise, our Exchange has
provided many Asian and multinational companies with fund-raising
opportunities.

Leveraging on Mainland China's Growth

Hong Kong provides an ideal platform for issuers to achieve exposure in the
rapidly growing Mainland Chinese market. Together with China's accession into
the World Trade Organisation (WTO) and Beijing's hosting of the Olympics in 2008,
companies will be able to leverage on the multitude of opportunities offered by
this escalating economy.

Home Market Theory

Hong Kong is part of Mainland China, our market is the first choice for Mainland
Chinese companies seeking a listing on an international overseas market. The
applicability of the "home market" theory is reinforced by the statistic that a
significant portion of the trading value of Mainland Chinese companies is
conducted in Hong Kong where such companies have a dual listing in Hong Kong
and another major overseas exchange.

Strong Legal System

Hong Kong has a well-established legal system based on English common law
which provides a strong and attractive foundation for companies to raise funds as
well as confidence to investors.

International Accounting Standards

Apart from Hong Kong Financial Reporting Standards and International Financial
Reporting Standards, our Exchange also accepts the use of generally accepted
accounting principles in the United States of America ("US GAAP") or other
accounting standards by new applicants under certain circumstances.
 Sound Regulatory Framework
Our Listing Rules are on a par with international standards and demand from
listed issuers a high level of disclosure. Our stringent corporate governance
requirements ensure that investors have access to timely and transparent
information which allows them to appraise the position and prospects of the
companies.

Free Flow of Capital and Information

With zero capital flow restrictions, numerous tax advantages, currency
convertibility and the free transferability of securities, Hong Kong offers an
attractive market for both issuers and investors alike.

Advanced Clearing and Settlement Infrastructure

Hong Kong boasts sound and solid securities and banking sectors which are
supported by a strong trading, clearing and settlement infrastructure. Further, the
Hong Kong Monetary Authority's US Dollar Clearing System allows local financial
institutions to settle US dollar transactions real time in the Asian time zone
against the delivery of Hong Kong dollars, instead of 12 hours later in the New
York time zone. This reduces the foreign exchange settlement risk caused by the
time gap between the settlement of Hong Kong dollars and US dollars.

Why Is Hong Kong So Attractive

Hong Kong is proving an ideal place to list for all listing types – for the past three years
it has dominated the global IPO market, taking the largest share of listings for 2009,
2010 and 2011 globally in terms of funds raised, raising over US$120 billion, more than
the London Stock Exchange and the New York Stock Exchange combined. Moreover, in
2011 Hong Kong topped league tables to stand as the world’s top financial centre –
overtaking both the U.S. and U.K. in the World Economic Forum’s Financial
Development Index, the first time that an Asian financial centre has ever received the
accolade.

Most interestingly, a substantial proportion of issuance in Hong Kong is now

international firms, making up around 50% of the proceeds raised in recent years,
whereas historically issuances were largely dominated by domestic or mainland
companies. Eric Landheer, Head of Issuer Marketing at Hong Kong Exchanges and
Clearing (HKEx), notes the range of reasons drawing investors to the territory, in
particular the market’s “ great valuations which are often the envy of other
exchanges around the world”. He adds that the high degree of liquidity and efficiency
make it ideal for raising follow-on funds. In 2011, examples of high Price-Earnings
ratios included Prada at 36x, L’Occitane at 25x and Sun Art Retail at 42x. The average
daily turnover of the HKEx remains robust, and has stayed so throughout the financial
crisis – whilst it peaked at US$11.3 billion in 2007, levels in 2011 were still more than
double 2006, turning over around US$8.9 billion.

However, beyond such great fundamentals, one of the key attractions of the Hong
Kong market is its connection to China. Listing in Hong Kong provides access to
otherwise unreachable Chinese investors and moreover can serve as a useful branding
exercise for firms growing into the Asian and Chinese markets. For many companies,
reaching a diversified investor base is one of the key factors affecting a listing decision.
“The most relevant portion of the value-add that you get by listing in Hong Kong is that
you get many of the same international investors that you get in London or New York,
but you get the added advantage of the Chinese and Asian institutional investors as
well, which you may not get in those other markets,” says Landheer. Chinese
institutional investors make up around 5% of turnover, while the Hong Kong market
also contains a large amount of retail investors at 35% of turnover. Finally, Hong Kong
is also at present the only viable offshore centre for renminbi equity fund raising,
useful for firms seeking to invest or expand in the mainland market.