DBS RMB Index for VVinning Enterprises 星展人民幣動力指數

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1 11 Aug 2015 DBS RMB Index for VVinning Enterprises 星展人民幣動力指數 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.

Composite index of a basket of parameters The RMB Index 65 1 Company Business Performance 60.4 60.5 2 3 Business Needs on RMB RMB transactions in Trade Service & Payment Receivables 60 55 58.9 58.

2 Composite index of a basket of parameters The RMB Index 65 1 Company Business Performance Business Needs on RMB RMB transactions in Trade Service & Payment Receivables Access to RMB Finance 50 Note: Target respondents had been changed to include business establishments with annual sales turnover of HK$1M or above starting from 1Q14 in order to focus on companies with relevant RMB usage. Weighting for each index parameter was updated based on data collected from 4Q12 4Q13 2

3 Business needs for RMB rebounded Use of RMB customer orders/ invoices in P12M Expected use of RMB customer orders/ invoices in N12M Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 45% 44% 29% 23% 30% Used in P12M/ Will use in N12M 69% 56% 51% 3 35% 53% 55% 70% 66% 63% 1% 1% 1 6% (n=210) (n=210) (n=212) (n=210) (n=211) Do not use/ Will not use Unsure Base: All respondents 28% 3% 4 46% 61% 64% 3% 7% 1% (n=210) (n=210) (n=212) (n=210) (n=211) Q17. How would you describe the changes of your customer order/ invoices in RMB in the past 12 months? [Index component] Q23. How would you describe the changes of your customer order/ invoices or trade settlement in RMB to change in the next 12 months? [Index component] 3

RMB appreciation expectations have increased Expectation on RMB vs USD

17% 5% 3 28% 1% 1 4% 20% 44% 41% 39% 40% 39% 21% 1% 13% 8% 15% 1 3% 15%

4 RMB appreciation expectations have increased Expectation on RMB vs USD Q2/14 (n=210) Q3/14 (n=210) Q4/14 (n=212) Q1/15 (n=210) Q2/15 (n=211) 3% 17% 5% 3 28% 1% 1 4% 20% 44% 41% 39% 40% 39% 21% 1% 13% 8% 15% 1 3% 15% 30% 4% 13% 17% 18% Appreciate 20% 34% 3 13% 24% Depreciate 23% 9% 14% 34% 20% Base: All respondents Q27. How would you foresee the direction of RMB appreciation or depreciation against the USD in the next 12 months? 4

5 Appreciation expectations affect business needs for RMB Relationship betw een RMB appreciation expectations and business needs for RM B % Q13 3Q13 4Q13 1Q14 3Q14 4Q14 1Q15 2Q15 Percentage of respondents expecting RMB appreciation RMB customer order/invoices N12M 5

6 Use of RMB payment & receivables rose Usage of RMB payment and receivables Usage of RMB trade services Q2/14 (n=190) Q3/14 (n=198) Q4/14 (n=194) Q1/15 (n=193) Q2/15 (n=195) Q2/14 (n=196) Q3/14 (n=200) Q4/14 (n=197) Q1/15 (n=193) Q2/15 (n=201) 3 20% 28% 24% 25% Currently using or will consider in N12M 8% 4% 10% 5% 5% Base: All companies (Excluding don t know/ unsure) Q49a. Which of the following RMB products are used by your company? How about in the next 12 months? Is it because there is no such need for this product for your company business? [Index component] *Note: The question is revised in W2. 6

7 RMB product usage increased Overall RMB product usage Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 34% 28% 29% 27% 30% Used any RMB products in P12M 66% % 70% Did not use any RMB products in P12M Base: All respondents (n=210) (n=210) (n=212) (n=210) (n=211) Q49a. Which of the following RMB products are used by your company? 7

8 Wider use of RMB exchange and RMB savings account Use of RMB cross-border trade settlement products Q2/14 (n=61) Q3/14 (n=51) Q4/14 (n=50) Q1/15 (n=44) Q2/15 (n=49) RMB Exchange 79% 75% 93% 80% 86% Savings account 0% - 9% 11% RMB Import Trade Settlement Account 8% 16% 13% 11% 3% RMB Export Trade Settlement Account 10% 4% 14% 13% 3% Import/Export Trade Finance and Bills for Collection 3% 5% 5% - Base: Companies using RMB trade settlement service Q31. Which of the following RMB trade settlement service does your company currently use? 8

Interest in RMB finance products is still muted Intention to apply for RMB Finance in the next 12 months Yes 1% Reasons for not applying RMB Finance in the next 12 months Company does not need RMB /

9 Interest in RMB finance products is still muted Intention to apply for RMB Finance in the next 12 months Yes 1% Reasons for not applying RMB Finance in the next 12 months Company does not need RMB / mainly use other currencies (e.g. USD / GBP / Euro) 59% Loan is not needed (e.g. has sufficient capital / stable business) 43% No 99% No business/ trading in Mainland China Fluctuation of RMB exchange rate 7% Base: All respondents (n=211) Base: Companies quite unlikely/ very unlikely to apply for RMB financing in N12M (n=207) Q49a. Which of the following RMB products are used by your company? How about in the next 12 months? (RMB Finance) Q42. Why do you think you are Very/ Quite unlikely to apply for RMB financing in the next 12 months? 9

Stages of RMB internationalisation Current account convertibility Hu Jintao, Wen Jiabao Xi Jinping, Li Keqiang 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Capital account

10 Stages of RMB internationalisation Current account convertibility Hu Jintao, Wen Jiabao Xi Jinping, Li Keqiang Capital account convertibility Reserve currency Stage 3 Stage 1 Promote RMB through trade Drive trade settlement in RMB Create offshore RMB market Stage 2 Deepen RMB position through investment Facilitate offshore RMB liquidity Drive usage of RMB investment products Encourage RMB to become reserve currency Further capital account opening RMB joins IMF Special Drawing Rights (SDR) basket 10

11 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents. Methodology

12 Research methodology Target Respondents Sample Size Business decision makers Account or finance director/ manager, business owners who are involved in the choice of financial service providers for the company W11: n = 211 companies (n = 200 SME + n = 11 Corporate) SME: Companies with annual sales turnover HK$1 million - 1 billion Corporate: Companies with annual sales turnover of HK$1 billion or above Interview Method Telephone interview Fieldwork Period W Q2 : 7 May June 2015 Weighting The final sample structure is weighted based on the business establishment information from the Census and Statistics Department Special note From W6, minimum requirement for companies annual sales turnover had been raised to HK$1M or above Note: Figures in this report may not be proportionally calculated due to weightings applied 12

13 Parameter Weightings In 1Q 2014, minimum requirement for annual sales turnover had been raised to HK$1M or above in order to target business establishments relevant to RMB usage. Weightings were revised based on data collected from 4Q 2012 to 4Q 2013 for business establishments with annual sales turnover HK$1M or above. With the updated weightings, more emphasis was assigned to the Business Needs on RMB and RMB Transactions to reflect overall RMB needs and usage in the HK commercial sector. Company Business Performance Business Needs on RMB Access to RMB Finance (Q25) P12M Company business performance (Q15) N12M Company business performance (Q22) P12M change of RMB customer order/ invoices (Q17) N12M change of RMB customer order/ invoices (Q23) RMB transactions in Trade Service & Payment Receivables (Q49a) Original parameter weightings Updated parameter weightings 18% 9% 17% 9% 20% 29% 2 27% 10% 5% 13% 21% 13

14 Index calculation The DBS RMB Index for VVinning Enterprises (DRIVE) Weighting is assigned to each option and transform into a scale of For Example: Improve by over 10% Improve by 5-10% No change Slow down by 5-10% Slow down by over 10% Currently using RMB trade settlement service Currently not using RMB trade settlement service but will consider N12M No need for RMB trade settlement service

15 Disclaimer: The information herein is published by DBS Bank Ltd (the "Company"). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. Any recommendation contained herein does not have regard to the specific investment objectives financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.

DBS RMB Index for VVinning Enterprises 星展人民幣動力指數

20 August 2014 DBS RMB Index for VVinning Enterprises 星展人民幣動力指數 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or