Tracking the Benefits of Growth

Transcription

1 Tracking the Benefits of Growth

2 I. Introduction of the SZ-HK Stock Connect II. Key Features of Shenzhen Stock Market III. Universe of SZ-HK Stock Connect IV. Flagships of SZSE Index Family 1

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4 Eligible Stocks for Northbound Trading At this stage, Shenzhen Northbound Connect is restricted to a range of eligible stocks. The universe is constituents of SZSE Component Index and SZSE Small/Mid Cap Innovation Index with a market capitalization of at least RMB 6 billion, and SZSE-SEHK A+H shares. 3

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6 Committed to developing multi-tiered capital market system Offering investment opportunities in innovative and growth sectors in China Offering a liquid marketplace for a diversified investment community SZSE Founded B-Shares SME Board Mutual Recognition of Funds (MRF) QFII Launched OTC Market ChiNext Market SZ-HK Stock Connect 5

7 After over 2 decades of development, SZSE s market capitalization, number of listed companies and trading value rank at forefront among stock exchanges in the world. Number of Listed Companies 1761 listed companies No.12 No.7 Market Capitalization USD 3.09 trillion Daily Turnover 4.79% in SZ Market No.1 No.4 Trading Value USD 19 trillion in 2015 USD 2.9 trillion YTD 6

8 The SZSE consists of the Main Board, the SME Board and the ChiNext Market. They serve companies at different developing stages and offer investors diversified portfolio. Main Board SME Board ChiNext Market Breakdown of market share Launch Date Dec.1,1990 May.17,2004 Oct.30,2009 Services Group Market Cap Listed Companies Average Market Cap Market- driven blue chips USD 0.99 trillion Niche champions USD 1.36 trillion High-tech enterprises USD billion USD 2.1 billion USD 1.7 billion USD 1.4 billion Free Float 80.9% 67.3% 58.3% 28% 29% 24% 44% 44% 44% 28% 27% 32% Inner: Market Cap Middle: Listed Companies Outside: Trading Value Main Board SME Board ChiNext Market 7

9 Market structure by sector and issuers ownership of Shenzhen market are different but complementary to other market. Shenzhen market Shanghai market 4% 20% 18% 10% 19% Breakdown of market cap by sector 8% 16% 34% 13% 10% 4% 6% 8% 1% 5% 7% 3% 2% 1% 10% A-share market 12% 18% 13% 10% 23% 6% 6% 2% 3% 6% 0% 20% 40% 60% 80% 100% Information Technology Industrials Consumer Discretionary Materials Financials Health Care Consumer Staples Telecommunication Services Utilities Energy Shenzhen market Shanghai market A-share market Breakdown of listed companies number by ownership structure 46% 66% 78% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 54% 34% 22% non-soes SOEs 8

10 Industrials: Technical Progress And Industrial Upgrading 400+ listed companies in SZSE ZOOMLION(000157) Among world s best in concrete machinery and hoisting machinery CIMC(000039) Leading logistics and energy equipment supplier in the world Financials: Horizontal Expansion 80+ listed companies in SZSE Ping An Bank (000001) The pioneer of the commercial banks of China Bank of Ningbo (002142) Lowest ratio of non-performing loans in the sector Shenwan Hongyuan (000166) Largest securities company in China VANKE-A(000002) Largest real estate developer in China Consumer Industry: Sustainable Growth 370+ listed companies in SZSE GREE(000651) World s largest air conditioning manufacturer Chongqing Changan Automobile (000625) Largest domestic automobile producer in China Yunnan Baiyao (000538) Leading Chinese herbal medicine producer with history over one hundred years WULIANGYE(000858) Largest producer of Chinese liquors CHANGYU(000869) Largest winery in Asia Shenzhen Overseas Chinese Town (000069) Domestic leader in tourism and culture industry 9

11 700 issuers in strategic emerging industries IT is Good: Internet listed companies in SZSE Eastmoney(300059) Online finance, wealth management and fund distribution Flytech (002230) The largest voice tech company in Asia Kingsun Science and Technology (300235) Online education solution High-End Equipment Manufacturing: Made in China 2025 Han s Laser (002008) Precise technology, the largest laser application company in China Hikvision (002415) Largest surveillance system manufacturer Ofilm (002456) Largest smart mobile phone screen manufacturer Tgood (300001) Provides power transformer and distribution system for high-speed rail. Green Industry 180+ listed companies in SZSE BYD (002594) World largest new energy vehicle manufacturer Gold Wind (002202) World largest wind power developer and manufacturer Biomedicine and General Medical Services 100+ listed companies in SZSE Lepu Medical (300003) Develops and produces cardiovascular disease diagnosis and treatment equipment Culture and Entertainment Industry 95 listed companies in SZSE Wanda Cinema Line (002739) The largest cinema operator in both China and the US Hunan TV (000917) Leading cable network and media content provider 10

12 More than two decades of experience. Trusted benchmarks of multi-tiered SZSE market. Display unique characteristics of SZSE securities. Help investors tracking the fast-growing market. 11

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15 The SZSE Component Index is designed to measure the performance of the 500 largest and most liquid A-share stocks listed and trading on the Shenzhen Stock Exchange. Quick Facts SZSE Code ISIN Bloomberg Ticker Reuters RIC No of Constituents Review Frequency CNM C8 SICOM.SZSC1 500 Semi-annually Base Value 1000 as of July 20,1994 Methodology Construction Universe: To be included in the index, a security must be listed on Shenzhen Stock Exchange for more than 6 months. ST or *ST stocks are excluded from the index universe. Selection: Based on a 1:1:1 weighted average of the three measures: full market capitalization, free-float market capitalization, and turnover. Weighting: Actual value of constituent s free float market capitalization. 14

16 China market Market positioning U.S. market SZSE Component Index The representative of innovation sectors NASDAQ Composite CSI 300 SSE Composite Index The most influential large-cap and blue chips index The earliest and widely used stock index S&P 500 Dow Jones Industrial Average 15

17 Large contribution from Information Technology Sector sets the index different from other large cap A-share indices. Breakdown of market cap by sector SSE 50 CSI300 SZSE Component Index Nasdaq Composite 8% 22% 43% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Information Technology Industrials Consumer Discretionary Financials Materials Health Care Consumer Staples Telecommunication Services Utilities Energy 16

18 Moderate-size Market Capitalization(USD billion) Constituent Weight Index Full Free float Average Largest Smallest Largest Smallest SZSE Component Index % 0.07% SSE % 0.43% CSI % 0.02% High-growth Index ROE(2015A) Dividend Yield (2015A) Growth Rate of Net Income(2015A) Growth Rate of Net Income (2016E) SZSE Component Index 10.08% 0.81% 14.42% 31.09% SSE % 3.20% -3.32% 0.05% CSI % 2.33% -0.35% 3.62% 17

19 The index represents approximately 55% of the total market capitalization of Shenzhen securities. Market Share of SZSE Component Index Constituents (as percentage of all the Shenzhen A-shares) 90% 60% 30% 55% 58% 44% 67% 81% 0% Total Market Cap Free Float Market Cap Value of Trading Operating Income of Constituents Net Income of Constituents 18

20 The constituents allocation is closely in sync with the continually growing market by absorbing more and more SME board and ChiNext companies. Breakdown of market cap by board SZSE Component Index SZSE listed companies 18% 44% 23% 35% Main Board SME Board 38% 42% ChiNext Market 19

21 227 or 45% constituents are engaged in National Strategic Emerging Industries New Information Technology 97 Green Industry Biotechnology High-End Equipment Manufacturing 26 Alternative Energy New Materials New-energy Vehicles

22 Constituents are full of market leaders and innovative enterprises 360 or 72% of constituents are non-soes. Home to companies on the forefront of innovation and gathering strength in the capital market. Traditional Industries Leaders Innovative Enterprises 140 Total Market Cap of GREE (RMB billion)

23 Applied to rules-based index methodology, constituents are screened, selected and weighted to ensure the index is investable and tradable. The index is designed for use in the creation of index tracking funds, derivatives and performance benchmark. Free-float % Free-float market Cap ETFs Index level On average Smallest Smallest 44% 50% 7% 0.51 (USD billion) SZSE Component Index OTC Index Funds Index Structured Funds 22

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25 The SZSE Small/Mid Cap Innovation Index is designed to represent the performance of the small and middle-cap segment as well as those fast-growing and innovative listed companies of Shenzhen market. Quick Facts SZSE Code ISIN Bloomberg Ticker Reuters RIC No of Constituents Review Frequency CNM100002KC9 SZ SZSESCI 500 Semi-annually Base Value 1000 as of Dec 30,2011 Methodology Construction Within the index universe of SZSE1000, the rest 500 securities after the 500 constituents of SZSE Component Index comprise of the SZSE Small/Mid Cap Innovation Index. SZSE 1000 SZSE Component Index (500 constituents) SZSE Small/Mid Cap. Innovation Index (500 constituents) 24

26 High return, high volatility, high risk adjusted return Cumulative index performance ( ) 400% 300% 200% 100% 0% -100% 12/ / / / / / / / /2015 Index performance, risk and return characteristics ( ) Index Return Annualized Return Annualized Std Dev Sharpe Ratio SZSE Small/Mid Cap Innovation Index SZSE Small/Mid Cap Innovation Index CSI % 25.26% 31.79% 0.84 CSI % 7.09% 27.15%

27 Adequate liquidity and investability Index SZSE Small/Mid Cap Innovation Index Turnover (Daily Average) Value (USD billion) Free-float % Free-float market Cap (USD billion) Ratio Index level Average Smallest Smallest Average Mean % 42.79% 48.05% 8.38% High valuation supported by high growth 1.79 P/E(LYR) 1.23 CAGR of Net Income (2016E-2018E) PEG 60 49% 12 8% SZSE Small/Mid Cap Innovation CSI300 SZSE Small/Mid Cap Innovation CSI300 26

28 SME board and ChiNext market listed constituents account for 70%+ R&D expenditures accounts for 4.41% of operating income Breakdown of market cap by board and sector 29% 21% 50% SME Board ChiNext Market Main Board 5% 3% 3% 2% 6% 20% 7% 19% 17% 18% Industrials Consumer Discretionary Materials Information Technology Health Care Consumer Staples Financials Telecommunication Services Energy Utilities 27

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30 Fast-growing blue-chip index Represent the performance of Shenzhen large-cap segment Balanced sector allocation, the top 3 sectors are Financials, IT and Consumer Discretionary. A variety of linked index products including ETFs, structured index funds, LOFs and OTC index funds. SZSE Code ISIN CNM G5 Breakdown of market cap by sector 4% 3% 1% Financials Bloomberg Ticker Reuters RIC SZ SZS100PI 7% 8% 25% Information Technology Consumer Discretionary Industrials No of Constituents % Consumer Staples Materials Average Market Cap Average Free-float Market Cap 7.20 USD billion 3.27 USD billion 21% 21% Health Care Telecommunication Services Utilities Energy 29

31 Offering exposure to China s high quality SMEs Fostering niche market leaders Remarkable historical performance, 11yr-annualized return of 19% since June 2005 Reasonable P/E ratio ( 32), high growth potential supported by high ROE (12%) SZSE Code ISIN Bloomberg Ticker Reuters RIC CNM B6 SZ SZSMEP No of Constituents 100 Average Market Cap Average Free-float Market Cap 4.17 USD billion 1.72 USD billion Breakdown of market cap by sector 9% 11% 7% 12% 5% 1% 12% 29% 14% Information Technology Industrials Consumer Discretionary Health Care Materials Financials Consumer Staples Telecommunication Services 30

32 Barometer of China s innovative sectors 90% constituents are state-certified high-tech enterprises,70% from strategic emerging industries Neither secondary board nor tiny market. Constituents are of high quality in adequate liquidity, profitability and growth potentiality. A relatively low correlation to other major A-share indices in historical performance. SZSE Code ISIN Bloomberg Ticker Reuters RIC CNM100002K13 SZ CHINEXTP No of Constituents 100 Average Market Cap Average Free-float Market Cap 3.17 USD billion 1.35 USD billion Breakdown of market cap by sector 11% 11% 17% 2% 1% Information Technology 8% 49% Industrials Health Care Consumer Discretionary Telecommunication Services Consumer Staples Materials 31

33 The indices are licensed to over 30 domestic and overseas fund issuers as underlying indices for ETPs and passively-managed investment funds. As of the end of 2016Q1, 76 index products with total net assets value around USD 11billion ETFs Index Structured Products LOFs We provide services of Index licensing Index data licensing Bond valuation service Overseas listed ETPs Custom indices, co-brand OTC Index Funds Financial Plans indices, index calculation agency 32

34 We build close relationship and explore collaborative opportunities with international financial institutions and exchanges. 33

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