2 China's Capital Markets-The changing landscape Introduction At the time of our last capital markets report in 2007, China was riding an unprecedented bull market. Since then, stock markets have been destabilised by the global financial crisis and equity valuations have still yet to recover to the peaks of that time Nevertheless, in absolute size China' s equities markets have now grown to a significant level, from USD 400 billion in 2005, to USD 4 trillion in 2010. This grow has been fuelled by more than 500 initial public offerings, including the listings of Chinas largest banks. Shanghai now has some of the world's largest companies Simon gleave represented on its bourse artner in Chat As the global financial crisis is consigned to history, longer term factors are Financial services KPMG China now coming into play. With pricing remaining a concern, and few large unlisted companies left to sustain the IPo boom, attention is turning to China s plans for capital account liberalisation and the potential implications for the future development of equities, bonds and derivative products Over the past three years several new products and innovations have been introduced and the market response has in many cases been dramatic. We can see that when the government and regulatory authorities act, things can happen quickly and any would-be investor needs to be committed and ready to act to take advantage of the opening up of different asset classes A lot has changed, but China is still a young market with huge potential for further growth in all asset classes Donald Keith Deputy ceo FTSE Group 0 2011 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG international"), a Swiss entity. All rights reserved.Introduction At the time of our last capital markets report in 2007, China was riding an unprecedented bull market. Since then, stock markets have been destabilised by the global financial crisis and equity valuations have still yet to recover to the peaks of that time. Nevertheless, in absolute size China’s equities markets have now grown to a significant level, from USD 400 billion in 2005, to USD 4 trillion in 2010. This growth has been fuelled by more than 500 initial public offerings, including the listings of China’s largest banks. Shanghai now has some of the world’s largest companies represented on its bourse. As the global financial crisis is consigned to history, longer term factors are now coming into play. With pricing remaining a concern, and few large unlisted companies left to sustain the IPO boom, attention is turning to China’s plans for capital account liberalisation and the potential implications for the future development of equities, bonds and derivative products. Over the past three years several new products and innovations have been introduced and the market response has in many cases been dramatic. We can see that when the government and regulatory authorities act, things can happen quickly and any would-be investor needs to be committed and ready to act to take advantage of the opening up of different asset classes. A lot has changed, but China is still a young market with huge potential for further growth in all asset classes. Simon Gleave Partner in Charge Financial Services KPMG China Donald Keith Deputy CEO FTSE Group © 2011 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. © 2011 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2 | China’s Capital Markets - The changing landscape