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

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Evangeline Sutton
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20 August 2014 DBS RMB Index for VVinning Enterprises

document is intended only for use during the presentation

1 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 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 2 Business Needs on RMB 60 57.3 58.3 58.5 57.

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 55 4 Access to RMB Finance 50 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Note: Target respondent had changed to include business establishments with annual sales turnover of HK$1M or above starting in 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

Overall increase in needs, usage & access to RMB financing

Performance Next 12 months Performance 2.

months Usage Next 12 months Usage Improve by over 10%

Slow down by over 10% Don't know/ not sure Used in P12M/

Usage of RMB Payment and Trade Services 4.

payment and receivables Usage of RMB trade services Very

consider in N12M 32% 8% Neither easy nor difficult No need

3 Overall increase in needs, usage & access to RMB financing 1. Business performance and outlook Past 12 months Performance Next 12 months Performance 2. Usage of RMB Customer Orders & Trade Settlements Past 12 months Usage Next 12 months Usage Improve by over 10% Improve by 5-10% No change (+/- 5%) Slow down by 5-10% Slow down by over 10% Don't know/ not sure Used in P12M/ Will use in N12M Do not use/ Will not use Unsure 3. Usage of RMB Payment and Trade Services 4. Ease of access to RMB credit facilities Usage of RMB payment and receivables Usage of RMB trade services Very easy Slightly easy Easy: 20% Currently using or will consider in N12M 32% 8% Neither easy nor difficult No need for this product Slightly difficult Very difficult Don't know/ not sure Difficult: 9% Currently using or will consider in N12M 32% 3

4 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. Index findings

Business needs for RMB increased significantly Change in RMB customer order/ invoices and trade settlement in P12M Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Change in RMB customer order/ invoices and trade

5 Business needs for RMB increased significantly Change in RMB customer order/ invoices and trade settlement in P12M Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Change in RMB customer order/ invoices and trade settlement in N12M Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Used in P12M/ Will use in N12M Do not use/ Will not use Unsure (n=169) (n=176) (n=172) (n=209) (n=210) (n=169) (n=176) (n=172) (n=209) (n=210) Base: All respondents Q17. How would you describe the changes of your customer order/ invoices settlement or trade settlement in RMB in the past 12 months? [Index component] Q23. How would you describe the changes of your customer order/ invoices settlement or trade settlement in RMB to change in the next 12 months? [Index component] 5

6 Usage of RMB products regained its growth momentum Overall RMB products usage Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Used any RMB products in P12M Did not use any RMB products in P12M Base: All respondents (n=169) (n=176) (n=172) (n=209) (n=210) Q49a. Which of the following RMB products are used by your company? 6

Usage of RMB products regained its growth momentum Usage of RMB payment and receivables Usage of RMB trade services Q2/13 (n=159) Q3/13 (n=167) Q4/13 (n=154) Q1/14 (n=189) Q2/14 (n=190) Q2/13 (n=159)

7 Usage of RMB products regained its growth momentum Usage of RMB payment and receivables Usage of RMB trade services Q2/13 (n=159) Q3/13 (n=167) Q4/13 (n=154) Q1/14 (n=189) Q2/14 (n=190) Q2/13 (n=159) Q3/13 (n=166) Q4/13 (n=151) Q1/14 (n=190) Q2/14 (n=196) Currently using or will consider in N12M 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. 7

Usage of RMB deliverable forwards increased RMB products used in the past 12 months FX Spot RMB Denominated Structured Investment Deposit Deliverable Forward RMB Letter of Credit Other Currency

8 Usage of RMB deliverable forwards increased RMB products used in the past 12 months FX Spot RMB Denominated Structured Investment Deposit Deliverable Forward RMB Letter of Credit Other Currency Linked to RMB Structured Investment Deposit RMB Bonds Q2/14 (n=87) Q1/14 (n=61) Structured Forward Base: Companies using any RMB products Q67a. Which RMB product has your company used in the past 12 months? Only mentions 1% above are shown. 8

Refused Base: Companies with RMB as part of the company s liquid asset Q62.

9 Usage options for RMB liquid assets are increasing Percentage of RMB in company s liquid asset More than 20% Q3/13 (n=79) Q4/13 (n=78) Q1/14 (n=91) Q2/14 (n=113) 11-20% Less than 10% Refused Base: Companies with RMB as part of the company s liquid asset Q62. What is the proportion of RMB in your company s total liquid asset (including case, saving, time deposit, investment)? 9

Usage options for RMB liquid assets are increasing Usage of RMB trade settlement products Deposit into RMB deposit/ RMB term deposit account Convert to HKD As payment to suppliers As operating cost

10 Usage options for RMB liquid assets are increasing Usage of RMB trade settlement products Deposit into RMB deposit/ RMB term deposit account Convert to HKD As payment to suppliers As operating cost for PRC operations Convert to other currencies Q2/14 (n=105) Q1/14 (n=70) Base: Companies uses RMB customer order/ invoices Q65. Normally, how would your company use the RMB received from customer order/ invoices? *Note: Only mentions >3% are shown 10

Ease of getting access to RMB loans improved substantially Ease of getting access of RMB loan or credit facilities Very easy Q2/13 (n=169) Q3/13 (n=176) Q4/13 (n=172) Q1/14 (n=209) Q2/14 (n=210)

11 Ease of getting access to RMB loans improved substantially Ease of getting access of RMB loan or credit facilities Very easy Q2/13 (n=169) Q3/13 (n=176) Q4/13 (n=172) Q1/14 (n=209) Q2/14 (n=210) Slightly easy Neither easy nor difficult Slightly difficult Very difficult Don't know/ not sure Easy 17% 17% 11% 12% 20% Difficult 14% 7% 12% 10% 9% Base: All respondents Q25. How would you describe the ease of getting access of RMB loan or credit facilities from your commercial banking service providers? [Index component] 11

Ease of getting access to RMB loans improved substantially Intention to apply for RMB Finance in next 12 months (n=210)

USD / GBP / Euro) Loan is not needed (e.g.

quite unlikely/ very unlikely to apply for RMB financing in N12M (n=203) Q49a.

12 Ease of getting access to RMB loans improved substantially Intention to apply for RMB Finance in next 12 months (n=210) Reason of not apply RMB Finance in next 12 months (n=203) Company does not need RMB / mainly use other currencies (e.g. USD / GBP / Euro) Loan is not needed (e.g. has sufficient capital / stable business) No business/ trading in Mainland China Base: All respondents (n=210), Companies quite unlikely/ very unlikely to apply for RMB financing in N12M (n=203) 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? Note: * Denotes percentages less than 0.5% 12

13 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 W7: n = 210 companies (200 SME + 10 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 : 8 May June 2014 Weighting The final sample structure is weighted based on the business establishment information from the Census and Statistics Department Special note In 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 13

14 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% 22% 27% 10% 5% 13% 21% 14

15 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

16 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. 16

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

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