Third Stage: 1999- 2008 Third Stage: 1999-2008 Number of Investors(in Million) 0m Upon the approval of CSrC, Shenzhen Stock Exchange launched the SME Board in May Direct financing channel for the growing SMEs Independent in operation, regulation, codes and index 12》200)33012x02201 A preparation for Growth-Enterprises board a shangna a shenzhan Third stage: 999-2008 Third Stage: 1999-2008 Financial requirement on listing in SME Positive net profit curve years and totals over 30 million RMB Cash flows from consecutive total over 50 million RMB. or Total equity before IPO is no lower than 30 million rMb Intangible assets account for no more than Closed-End .0% of net asset (excluding licensing of land, fishing and mining) Third Stage: 1999-2008 Third Stage: 1999-2008 Trading Instruments in SZSE Corporate bonds Issued by corporations or LLCs Based on the financing needs of corporations Should Don't need approval of the government losed-End Debenture Issued by large state-owned companies(usually for Should be approved by the National Development7 5-37 Third Stage: 1999~2008 Number of Investors (in Million) 5-38 Third Stage: 1999~2008 — SME Board ◦ Upon the approval of CSRC, Shenzhen Stock Exchange launched the SME Board in May 2004. ◦ Direct financing channel for the growing SMEs with well-defined core business and hi-tech contents ◦ Independent in operation, regulation, codes and index ◦ A preparation for Growth-Enterprises board 5-39 Third Stage: 1999~2008 — Financial requirement on listing in SME ◦ Positive net profit in recent 3 consecutive years and totals over 30 million RMB ◦ Cash flows from operating in recent 3 consecutive total over 50 million RMB, or sales from operating in recent 3 consecutive total over 300 million RMB ◦ Total equity before IPO is no lower than 30 million RMB ◦ Intangible assets account for no more than 20% of net asset（excluding licensing of land, fishing and mining) Third Stage: 1999~2008 — Trading Instruments in SSE 5-40 2001 2002 2003 2004 2005 2006 2007 2008 Corporate Bonds 11 17 19 27 50 66 71 100 Cash 17 19 24 47 63 68 Repurchases 3 3 3 3 Debenture 2 Convertibles 1 3 13 19 18 19 12 12 Treasury Bonds 27 28 30 44 52 113 113 77 Cash 19 17 21 29 43 54 62 Repurchases 8 11 9 15 9 57 51 Funds 23 25 25 25 26 26 17 13 Closed-End 23 25 25 25 25 24 14 13 ETFs 1 2 3 3 Warrants 4 18 6 14 Third Stage: 1999~2008 — Trading Instruments in SZSE 5-41 2001 2002 2003 2004 2005 2006 2007 2008 Corporate Bonds 1 4 9 13 16 24 26 41 Convertibles 3 6 10 13 11 7 5 5 Treasury Bonds 19 21 35 39 53 62 70 85 Cash 19 17 21 29 43 54 62 Repurchases 8 11 9 15 9 57 51 Funds 25 29 29 30 39 46 48 48 Closed-End 25 29 29 29 29 29 21 18 Open-End 1 10 15 25 28 ETFs 2 2 2 Warrants 3 8 7 14 Third Stage: 1999~2008 — Corporate bonds ◦ Issued by corporations or LLCs ◦ Based on the financing needs of corporations ◦ Should be approved by CSRC ◦ Don’t need approval of the government ◦ Credit rating is usually required — Debenture ◦ Issued by large state-owned companies (usually for the financing of big projects) ◦ Should be approved by the National Development and Reform Commission 5-42