HKEX INVESTOR PRESENTATION

August 2017

2

Disclaimer

The information contained in this document is for general informational purposes only and does not constitute an offer, solicitation,

invitation or recommendation to subscribe for or purchase any securities, or other products or to provide any investment advice or service

of any kind. This document is solely intended for distribution to and use by professional investors. This document is not directed at, and 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 or which would subject Hong Kong Exchanges and Clearing Limited (“HKEX”) to any registration

requirement within such jurisdiction or country.

This document contains forward-looking statements which are based on the current expectations, estimates, projections, beliefs and

assumptions of HKEX about the businesses and the markets in which it and its subsidiaries operate. These forward-looking statements

are not guarantees of future performance and are subject to market risk, uncertainties and factors beyond the control of HKEX. Therefore,

actual outcomes and returns may differ materially from the assumptions made and the statements contained in this document.

Where this document refers to Shanghai-Hong Kong Stock Connect and/or Shenzhen-Hong Kong Stock Connect (together, the “Stock

Connect” programs), please note that currently, access to northbound trading is only available to intermediaries licensed or regulated in

Hong Kong; southbound trading is only available to intermediaries licensed or regulated in Mainland China. Direct access to the Stock

Connect is not available outside Hong Kong and Mainland China.

Where this document refers to Bond Connect, please note that currently, access to northbound trading is only available to foreign

investors that are able to trade onshore bonds on the China Foreign Exchange Trade System & National Interbank Funding Centre.

Although the information contained in this document is obtained or compiled from sources believed to be reliable, HKEX does not

guarantee the accuracy, validity, timeliness or completeness of the information or data for any particular purpose, and shall not accept

any responsibility for, or be liable for, errors, omissions or other inaccuracies in the information or for the consequences thereof. The

information set out in this document is provided on an “as is” and “as available” basis and may be amended or changed. It is not a

substitute for professional advice which takes account of your specific circumstances and nothing in this document constitutes legal

advice. HKEX shall not be responsible or liable for any loss or damage, directly or indirectly, arising from the use of or reliance upon any

information provided in this document.

3

Agenda

Agenda

2

1 HKEX Group Financial and Market Update

HKEX Strategic Plan 2016-18

China Connectivity Update

Appendix

3

4

4

1H 2017 – Key Highlights

Political and economic uncertainties continue to cloud global economic prospects

Improved Cash Market sentiment offset by reduced Derivatives volumes

Bond Connect Northbound trading link launched on 3 July 2017

Maintained cost discipline while continuing with strategic initiatives

Excluding one-off items, revenue up 9% and PAT up 15% yoy;

Revenue boosted by increased net investment income

5

8 7 10 16 18

34

88

72 62

69 70

54 63

69

106

67 77

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 Y

TD

64 111 214

282 302

525 591

427

642

859

490

305 379

943

1,115

490

200

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 Y

TD

IPO Follow On

2017 Volume Picked up since February

Source: HKEX & LME data

(1) 2017 YTD as of 31 Jul 2017

237 234 286 283 312

345 369

446 442 475

584 634

676 700 670 619 633

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 Y

TD

44 45 62 80 104 174

359 432 398

468

572 488

533 577

769 762 800

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 Y

TD

Futures Options

Securities ADT (HK$ billion) Derivatives ADV (’000 contracts)

Total Funds Raised (HK$ billion) Commodities ADV (’000 lots)

(1) (1)

(1) (1)

6

Investment income

Trading and clearing fees flat

as cash market gain offset by

fall in derivatives, including

commodities

Listing fees

One-off Lehman post-

liquidation interest

income Basic Earnings per

Share

+ 10% + 14% + 17% + 16%

5,630

6,203

1,688 1,711

3,942

4,492

2,985 3,493

2.47 2.86

1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017

($)

Operating

Expenses (1) EBITDA

Profit Attributable to

HKEX Shareholders

Staff and Premises costs

partly offset by IT expenses EBITDA margin 2%

PAT more than EBITDA

due to D&A as certain assets

became fully amortised

$67.5bn

ADT

+13% $76.0bn

% increase lower than PAT due

to shares issued for

scrip dividends

+ 15%

(excluding one-off items)(2)

+ 12%

(excluding one-off items)(2)

(1) Excludes depreciation and amortisation, finance costs, and share of loss of a joint venture

(2) 2017 one-off revenue item is Lehman post-liquidation interest payment of $55m. One-off opex item is an insurance recovery of $23m

Revenue and Other

Income

Margin 70% 72%

+ 1%

+ 14%

(excluding one-off items)(2)

+ 3% (excluding one-off items)(2)

+ 9% (excluding one-off items)(2)

($ million)

Highlights – 1H 2017 Results

Prior year comparison

7

Revenue Movement by Segment

6,203

(113) (83)

230 186 15 338

5,630

1H 2016 Cash Equity Equity andFinancial

Derivatives

Commodities Clearing Platform andInfrastructure

Corporate Items 1H 2017

($ million)

Change year-on-year

Trading fees & tariff

from ADT

Market data fees

due to allocated

fees from trading

activity

Listing fees due

to listed cos and

IPOs

+363% +18% -11% -10% +9% +6%

%

Trading fees

due to ADT of

DWs, CBBCs,

warrants and

ADV on HKFE

Listing fees due

to newly listed

DWs and CBBCs

Trading fees

from ADV and

fee reductions

+10%

Net investment

income due to

Margin Fund size

and return

One-off Lehman

post-liquidation

interest of $55m

Clearing fees

from HK ADT but

offset by LME

ADV

Network fees

due to participants

migrating to Orion

Central Gateway

Hosting services

fees due to

new customers and

increased usage

Net investment

income

(1) Headline ADT up 13% (1H 2017: $76.0bn; 1H 2016: $67.5n); ADT of cash equity up 27% (1H 2017: $61.4bn; 1H 2016: $48.3bn); ADT of DWs, CBBCs and warrants included

under equity and financial derivatives down 24% (1H 2017: $14.6bn; 1H 2016: $19.2bn)

Trading related revenue slightly down.

Increase comes from listing and data fees

8

1,012 836

513

1,770

190

3,942

1,221

730

440

1,930

204

4,492

Trading fees & tariff from

ADT

Market data fees due to

allocated fees from

trading activity

Listing fees due to

listed cos and IPOs

Staff costs

Trading fees

due to ADT of DWs,

CBBCs and warrants and

ADV on HKFE

Listing fees due to

newly listed DWs and

CBBCs

Allocated costs due to

volume of DWs and

CBBCs

Trading fees from

ADV and fee reductions

Expenses due to one-off

insurance recovery, IT cost

savings and GBP

depreciation partly offset

by QME costs

Net investment income

on Margin Funds

One-off Lehman post-

liquidation interest

Clearing fees from HK

ADT partly offset by LME

ADV

Staff costs, premises costs

& bank charges

Overall EBITDA

margin

(Increase in investment

income under corporate

items has lifted overall

EBITDA margin)

Network fees due to

participants migrating to

Orion Central Gateway

Hosting services fees

due to new customers

and increased usage

+ 21% - 13% - 14% + 9% + 7% + 14%

Performance by Operating Segment

EBITDA

Cash Equity Equity & Financial

Derivatives Commodities Clearing

Platform &

Infrastructure

Group Total

(incl. Corp. Items)

Share of Group EBITDA (before Corporate Items)

%

24% 27%

EBITDA Margin

79% 81% 78% 77% 64% 61% 83% 84% 72% 73%

70% 72%

19% 16% 12% 10%

41% 43%

4% 4%

1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017

1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017

%

($ million)

9

1,158 1,170 1,200

1,024

1,178 1,189 1,287

1,511 1,575

2,520

2,330

1,531 1,432

1,553 1,543

1,241

1,716 1,777

2,222 2,218 2,134 2,149 2,335 2,286

2,471

2,757 2,796

4,057

3,747

2,775 2,751

2,879 2,848 2,638

3,048 3,155

669 672 677 759 734 689

753 782 718

862 881 829 854 834 834

933 833 878

1,553 1,546 1,457

1,390

1,601 1,597 1,718

1,975 2,078

3,195

2,866

1,946 1,897

2,045 2,014

1,705

2,215 2,277

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Profit attributable to Shareholders

Revenue and Other Income

Operating Expenses

EBITDA

2016 2015 2013 2014 2017

(1)

Quarterly Trend

Results in line with historical trend

(1) Excludes depreciation and amortisation, finance costs, and share of loss of a joint venture

(2) Dotted trend lines are illustrative and do not constitute a forward forecast

Quarterly Performance

($ million)

Record 2015 performance distorts long term view; subsequent performance in line with historical trend

10

Agenda

2

1 HKEX Group Financial and Market Update

HKEX Strategic Plan 2016-18

China Connectivity Update

Appendix

3

4

11

Our Journey So Far

Mainland China

RMB internationalisation

Progressive two-way capital opening

Expansion of Free Trade Zones

Domestic capital markets develop

Retail investors are the driving force

Derivatives turnover grows quickly

Fast Economic Growth

Privatisation of SOEs

Opening

Up Era 2011-2014

Domestic

Growth Era 2001-2010

IPO Era 1993-2009

Mutual Market Era 2014-

Shanghai-Hong Kong Stock Connect

Shenzhen-Hong Kong Stock Connect

Mutual Recognition of Funds (MRF)

Bond Connect

RMB trade settlement and payments

Expansion of direct access: RQFII

Offshore RMB benchmarks

Capital gateway for IPO proceeds

Limited direct access: QFII & QDII

Offshore fundraising centre

Segregated from Mainland market

Hong Kong

12

HKEX’s Strategic Vision

Expanded our asset class reach

Created mutual market access

channels

Enhanced market microstructure

and efficiency

Continued to build and upgrade

systems and platforms

1

2

3

4

Mainland International

Issuers / Products

Issuers / Products

WEALTH

MANAGEMENT

CENTRE

RISK

MANAGEMENT

CENTRE

COMMODITIES

PRICING

CENTRE

Investors Investors

Mainland Investors

International issuers

Commodities capability

Risk management / derivatives

Need to bring:

What have we achieved so far? What is our long-term aspiration?

13

Strategic Development Highlights

TWO

Gold

LMEprecious

USD&CNH Physically

Delivered Gold Futures

Contracts

THREE

RMB

RMB Currency Options

5-Year Treasury Bond

Futures (Pilot)

Co-branded RMB Index

Futures

FOUR

Primary Connect

Derivatives Connect

Bond Connect

Commodities Connect

ONE

Connect

Build Qianhai

Mercantile Exchange

Platform

Portfolio of initiatives across asset classes and connecting to China

14

Market Development Highlights

TWO

Boards

GEM

New Board

THREE

Enhancements

Hong Kong Market

Quality

London Market

Structure

Extend trading hours

and products in AHFT

FOUR

Orion Trading Platform

– Securities Market

Derivatives Market

System Upgrade

Next Generation

Clearing

HKEX Private Market

ONE

Reform Investments

Listing regime

Strong emphasis on listing reform and continued enhancement of market structure

15

Business Update

2017 YTD(1)

Launched 17 Leveraged & Inverse Products tracking HSI & HSCEI in March 2017

Continued to enhance Stock Connect operating model

Launched consultation on a proposed New Board and a review of GEM on 16 June 2017

Equities

FIC

Launched new USD/CNH Currency Options on 20 March 2017

OTC Clear launched Client Clearing and allowed acceptance of non-cash collateral in Q1 2017

and continued with new members onboarding

Launched pilot MOF T-Bond Futures on 10 April 2017

Launched Bond Connect Northbound trading link on 3 July 2017

(1) YTD as of 9 Aug 2017

Launched discussion paper on LME market structure on 24 April 2017

Upgraded LMEselect in Q1 2017, LMEsmart and LMEmercury in Q2 2017

Launched physically settled CNH and USD Gold Futures contracts in Hong Kong and

LMEprecious in London on 10 July 2017

Commodities

Launched Volatility Control Mechanism (VCM) in the derivatives market on 16 January 2017

Introduced margin offset between HSI and HSCEI futures and options on 20 March 2017

Introduced the revised stock options position limit (SOPL) model on 1 June 2017

Issued a consultation paper on the proposed after-hours trading enhancements on 28 June 2017

Introduced China Connect Central Gateway to facilitate Northbound trading on 17 July 2017

Launched Phase 2 of the Closing Auction Session (CAS) on 24 July 2017

Market

Microstructure &

Platforms

Equities

Commodities

Market

Microstructure &

Platforms

FIC

Equities

Commodities

Market

Microstructure &

Platforms

16

Objectives of the New Board and GEM Reform Proposals

Market Concerns How We Address Them

MARKET QUALITY

Post-IPO liquidity / volatility

“Shell” creation

Circumvention of Main Board due

diligence requirements via GEM

“stepping stone”

Raise listing criteria

Mandatory public offer to broaden shareholder base and reduce price

volatility

Limit impact on existing issuers and investors

Widen access to listings

Maintain protection standards appropriate for eligible investors

Remove obstacles to secondary listings by Mainland issuers

ACCESS TO LISTINGS

High concentration of “Old Economy”

sectors

Lack of exposures to growth sectors

Current listing framework does not cater

to needs of “New Economy” issuers:

Pre-profit companies

Non-standard governance features

No secondary listings of Mainland

companies

GEM REVIEW

NEW BOARD CONCEPT

Remove Main Board “stepping stone” mechanism

Targeted measures to attract New Economy issuers

17

Potential Benefits of New Board

Size of Addressable Market (Primary funds raised by Mainland

companies listed in the past 10 years)

7.2

7.8

Mainland Companieswith WVR

Mainland Pre-ProfitCompanies

12%

% of HK IPO funds raised:

5%

Listed in the US

Listed in Mainland

US$15bn

US$34bn

Enhance Hong Kong’s competitiveness as a

global financial centre

Attract high growth New Economy issuers

Diversify Hong Kong’s Market

Develop Hong Kong’s high tech ecosystem

Generate additional tax revenues from trading

Create job opportunities

18

16 JUNE 2017

18 AUGUST 2017

Market Feedback Process

Deadline for

market feedback Launched

consultation process

2 months

KEY DATES

Subject to responses, we will finalise detailed rules by early 2018

HKEX invites market views on the two proposals

19

Agenda

Agenda

2

1 HKEX Group Financial and Market Update

HKEX Strategic Plan 2016-18

China Connectivity Update

Appendix

3

4

20

HKEX Mainland Strategy with Evolution of Cross-Border Integration

Broadening and

deepening China

Inc. relationships

Relationship

Building Trading hours

Listing of Mainland

companies

Continued

Harmonisation Index development

with SSE and SZSE

CESC JV Created leverage in

commodities

LME

Acquisition Mutual market

access across

asset classes

Shanghai-Hong

Kong Stock

Connect

Shenzhen-Hong

Kong Stock

Connect

Bond Connect

China

Connectivity

Infrastructure

Products

TSF

RMB

Readiness

Institutional Quotas

QFII / QDII

Issuers

A+H Shares

Access Products

ETFs / RQFII

Individual Flows

Shanghai-HK Stock Connect

Shenzhen-HK Stock Connect

Mutual Recognition of Funds

Bond Connect

China’s rollout of Mutual Market Access remains on track

RMB Internationalisation

21

Shenzhen NB Connect Shanghai NB Connect

9011 (Main: 253, SME: 425, ChiNext: 223)

RMB 15.6 tri (72%)

RMB 132 bn (59%)

572 (One single board)

RMB 24.2 tri (82%)

RMB 119 bn (58%)

Eligible

Stocks

No.

Mkt Cap

ADT

Removed

RMB 13 bn

None

RMB 13 bn

Agg. Quota

Dly. Quota Quota

Investors Eligibility None ChiNext participation limited to institutional

professional investors initially3

NORTHBOUND

Shenzhen SB Connect Shanghai SB Connect

Eligible

Stocks

No.

Mkt Cap

ADT

Agg. Quota

Dly. Quota Quota

Investors Eligibility

SOUTHBOUND

Removed

RMB 10.5 bn

None

RMB 10.5 bn

RMB 500k RMB 500k

310 (Hang Seng Composite LargeCap, MidCap &

A+H shares not in indices)

HKD 23.8 tri (84%)

HKD 46 bn (85%)

4182

(Hang Seng Composite LargeCap, MidCap, SmallCap

& A+H shares not in indices )

HKD 24.8 tri (88%)

HKD 49 bn (91%)

Estimated data as of end May 2017

Key Features of Shanghai & Shenzhen Connect

(1) SZ Northbound: Constituents of SZSE Component & SZSE Small/Mid Cap Innovation indexes with market capitalization of at least RMB 6 bn (average daily market cap in 6 months prior to the periodic review of relevant index, i.e. 1 May 2016 to 31 Oct 2016; to be reviewed half-yearly), and SZSE-SEHK A+H shares (except shares under “risk alert” or delisting arrangement)

(2) SZ Southbound: Constituents of Hang Seng Large & MidCap indexes, constituents of Hang Seng SmallCap index with market capitalization of at least HKD 5 bn (average month-end market cap in 12 months prior to the periodic review of the index, i.e. 1 Jan 2016 to 30 Dec 2016; to be reviewed half-yearly), and SSE-SEHK and SZSE-SEHK A+H shares

(3) Subject to resolution of related regulatory issues, other investors can trade ChiNext stocks listed on Shenzhen Stock Exchange

22

The Level of Penetration in the Equity Market through Stock Connect

Data as of May 2017

* www.szse.cn, www.sse.com.cn, HK data based on HKEX Main Board only

% of all China & HK*

listed companies:

45%

46%

21%

% of listed companies in the mutual market*

MUTUAL MARKET

82%

72%

88%

58%

59%

91%

By

Market

Cap

By

Turnover

By

Number

Shenzhen Connect represents a significantly increased penetration

of China and Hong Kong listed companies

(from 15% under SSE Connect)

(from 84% under SSE Connect)

(from 85% under SSE Connect)

SSE Connect only Including SZSE connect

81% 59%

62% 34%

36% 17%

SSE

SSE

SSE

SZSE

SZSE

SZSE

418

572

901

23

Enlarged and Enhanced Connect Ecosystem

* Note: Eligible shares for the Shanghai & Shenzhen Southbound links are different

* Note: Eligible shares for the Shanghai & Shenzhen Southbound links are different

Stock Connect brings together two different market structures

to facilitate seamless cross-border trading

“Home Market” rules

Leverages existing

infrastructure

Gross order routing

RMB

Super-clearer model

Regulatory cooperation

En

forc

em

en

t Co

op

era

tion

CSRC

SFC

Reg

ula

tory

Co

op

era

tio

n

HKSCC

SEHK

HK Shares

Eligible Shares*

SH A Shares

SZSE

Eligible Shares Eligible Shares

Cle

ari

ng

Lin

k

Cle

ari

ng

Lin

k

SSE/SZSE Members & ChinaClear Participants

Mainland investors

SZ A Shares

SEHK SZ SPV

ChinaClear SZ ChinaClear SH

SSE

SEHK SH SPV

SSE SPV

HK & Overseas investors

Order

Routing

Order

Routing

EPs / CPs

SZSE SPV

MAINLAND

HONG

KONG

24

MSCI China A Shares Inclusion

Source: MSCI as of 21 June 2017

(1) As of 31 May 2017

(2) The 5% inclusion factor will be applied to the free-float market cap of China A share in the MSCI China Index at the review date

(3) Including H-shares(HK), Red Chip(HK), P Chip(HK) and B-shares(Mainland) and Overseas

MSCI announced on 20 June 2017 that it will include 222 China A Large Cap shares in the MSCI Emerging Markets Index

China 28.55%

China A shares 0.73%

KR 15.27%

TW 12.07%

IN 8.75%

Others 34.63%

China Total:

29.28%

(3)

MSCI may revise the planned implementation to a single phase should the daily limit be abolished

or significantly expanded before the scheduled inclusion dates

China 27.66%

KR 15.65%

TW 12.23%

IN 8.75%

Others 35.71%

(3)

Include only Large Cap shares accessible through Stock Connect

Include A shares that have H shares listings

Exclude:

Stocks suspended for >50 days in the past 12M

Stocks suspended at time of index reviews

2-step inclusion process of 5% inclusion

2.5% inclusion at the May 2018 semi annual index review

5% inclusion at the Aug 2018 quarterly index review

August 2018: 5% Inclusion(2) Today(1)

Potential increase of the currently announced 5% Inclusion Factor

Potential addition of China A Mid Cap shares

Subject to:

Greater alignment of the China A shares market with international market accessibility standards

The resilience of Stock Connect

The relaxation of daily trading limits

Continued progress on trading suspensions

Further loosening of restrictions on the creation of index-linked investment vehicles

Roadmap of

Future China

A Shares

Inclusion

25

97 69

90

200

155 143 126 94 82 80 75 62

82 66 64 65 60 62 62 66 74 61 67 64 57 82 82 74 79 80 85

0

5000

10000

15000

20000

25000

30000

35000

0

50

100

150

200

250

300

350

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

2015 2016 2017

392 276 514

829 820 954 701

514 282 378 440 314 217 193 234 211 151 190 226 194 158 193 268 202 171 211 222 236 181 167 215

246 230

434

603 741 792

523

463

299

508 624

479 324 296 349 360

281 384 380

292 255 290 353

245 205 238 282 276 247 218 250

638 506

948

1,432 1,560

1,746

1,224

977

581

886 1,063

793

541 489 583 572

432 574 606

486 413 483 620

447 376 449 504 512 428 385 465

0

1,000

2,000

3,000

4,000

5,000

6,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

2015 2016 2017

Market Activity in Mainland and Hong Kong Markets

Source: HKEX, SSE, SZSE & Bloomberg, as of 31 Jul 2017

Index ADT RMB bn

January – June 2015

China A Share rally

Hong Kong index and volumes

catch-up

Unprecedented volumes in 2Q

2015

July 2015 – July 2016

Downturn in A Share market

Prompted significant policy

actions by Mainland authorities

Q4 2015 saw renewal of A Share

rally, with lower volumes reflecting

less leverage

1H 2016 more subdued cash

market activity both locally and

globally

Since August 2016

Shenzhen Connect announced on

16 August and launched on 5

December

Recent pick-up in volumes

ADT HKD bn Index

SSE ADT (LHS) SZSE ADT (LHS) CSI 300 (RHS)

2015 : +2% 2016: -5%

2015: -8% 2016: +3%

2017 YTD: +12%

2017 YTD: +23%

HKEX ADT (LHS) Hang Seng Index (RHS)

26

5.9 7.6 6.2 5.6 7.8

10.8 10.5 14.2

11.1 7.0 5.5 5.8 5.8

3.6 3.8 3.3 5.0 3.5 2.5 3.3 3.4 3.7 3.7 3.6 4.3 4.8 3.7 4.2 4.7 5.9 5.4 5.7 5.6

1.7 1.6 2.1

2.9 3.8 3.9 4.4 4.1

0.8 1.0

1.5 0.8

1.6

12.4

5.4

4.4

4.2

2.4 1.7 1.7 1.8

2.1 2.6 2.0 2.4

2.1 2.5 4.0 2.9 4.1

8.0 3.8

4.6

5.0 4.1

6.9 6.6

6.1 6.8 7.1 7.6

0.5 0.5

1.0 1.7

1.4 1.4 1.7 2.2

6.6 8.6 7.7

6.4

9.4

23.1

15.9 18.6

15.4

9.4 7.2 7.5 7.6

5.6 6.4 5.3

7.4 5.7 5.0

7.3 6.3 7.8

11.7

7.4 8.9

12.0 9.9

14.1 15.9

17.2 17.5 18.9 19.5

0.5% 0.5% 0.8% 0.6%

0.9%

3.1%

1.8% 1.5% 1.7% 1.3%

1.0% 1.1% 1.2% 1.7% 1.6% 1.5%

1.9% 1.6%

2.0%

3.2%

2.3%

3.1%

5.4%

3.2% 3.4%

4.3% 4.0%

4.8% 5.0% 5.0% 5.2% 5.5% 5.8%

-5.00%

-3.00%

-1.00%

1.00%

3.00%

5.00%

0

5

10

15

20

25

30

35

40

45

50

Stock Connect – Trading Trends

Source: HKEX data as of 31 Jul 2017

(1) Northbound trading is conducted in RMB; The NB figures in the chart are converted to HKD based on the month-end exchange rate

(2) CSRC and SFC jointly announced the approval of Shenzhen-Hong Kong Stock Connect on 16 August 2016

(3) China Insurance Regulatory Commission (CIRC) published the notice on 8 September 2016

NB record

of HKD29.2 bn

on 6 July 2015

SB record

of HKD26.1 bn

on 9 April 2015

Northbound turnover exceeded Southbound at the initial stage

Southbound turnover picked up after the announcement of Shenzhen-Hong Kong Stock Connect(2) and the approval of onshore

insurance funds to trade through Shanghai-Hong Kong Stock Connect(3)

Stock Connect Average Daily Trading Volume (HKD bn)

Aggregate quota removed since 16 August 2016; Shenzhen Connect launched on 5 December 2016

Shenzhen Southbound

Shanghai Northbound (1)

Shenzhen Northbound (1)

Shanghai Southbound

Stock Connect contributed $162m in income in 1H 2017 and $71m for 1H 2016

Total average daily trading volume

Percentage of Southbound turnover of Hong Kong Market

27

Northbound Stock Connect – Top 10 Traded Stocks

Source: HKEX, from 1 July to 31 July 2017 (* A&H listed stocks)

Rank Stock Name ADT

RMB Million %

1 Kweichow Moutai 296.5 6.2%

2 Ping An Insurance* 278.3 5.8%

3 Jiangsu Hengrui Medicine 114.5 2.4%

4 SAIC Motor 111.7 2.3%

5 Anhui Conch Cement* 110.5 2.3%

6 China Merchants Bank* 109.4 2.3%

7 ICBC* 102.1 2.1%

8 China State Construction

Engineering 101.3 2.1%

9 Industrial Bank 95.9 2.0%

10 CITIC Securities* 93.0 1.9%

Rank Stock Name ADT

RMB Million %

1 Hangzhou Hikvision Digital

Technology 331.6 9.5%

2 Gree Electric Appliances 269.9 7.7%

3 Midea Group 251.8 7.2%

4 Wuliangye Yibin 115.9 3.3%

5 Yunnan Baiyao 71.5 2.0%

6 BOE Technology 70.7 2.0%

7 Zhejiang Dahua Technology 68.7 2.0%

8 Ping An Bank 62.0 1.8%

9 Jiangsu Yanghe Brewery Joint-

Stock 55.9 1.6%

10 IFLYTEK 47.1 1.3%

Shanghai – Hong Kong Stock Connect Shenzhen – Hong Kong Stock Connect

28

Southbound Stock Connect – Top 10 Traded Stocks

Source: HKEX, from 1 July to 31 July 2017 (* A&H listed stocks)

(1) IGG was newly included in Hang Seng Composite SmallCap Index, effective on 6 Mar 2017

Rank Stock Name ADT

HKD Million %

1 Tencent 502.4 6.6%

2 ICBC* 462.7 6.1%

3 HSBC 441.2 5.8%

4 Sunac China 406.0 5.3%

5 Ping An Insurance* 201.8 2.7%

6 Evergrande Real Estate 200.4 2.6%

7 Geely Automobile Holdings 192.7 2.5%

8 GAC Group* 162.9 2.1%

9 NCI* 161.5 2.1%

10 Great Wall Motor* 46.0 1.9%

Rank Stock Name ADT

HKD Million %

1 Tencent 126.5 5.7%

2 Sunac China 117.5 5.2%

3 China Vanke* 85.9 3.8%

4 Evergrande Real Estate 73.1 3.3%

5 MEITU 68.1 3.0%

6 IGG(1) 67.7 3.0%

7 Future Land 67.6 3.0%

8 Geely Automobile Holdings 54.8 2.4%

9 ZTE* 48.1 2.1%

10 GAC Group* 43.1 1.9%

Shanghai – Hong Kong Stock Connect Shenzhen – Hong Kong Stock Connect

29

Tapping into China’s Vast Bond Market

Sources: WIND, CBRC (Jun 2017), IMF, SIFMA

Bank Loans Equities Bonds

USD28 tn

USD8.5 tn USD10.1 tn

~90% Interbank

~10% Exchange

55% SSE

45% SZSE

International

Investors

China’s Bond

Market

Key Policy Drivers

• Risk migration from banking sector to bond market

• Greater credit differentiation amid ongoing market

reforms

• Funding needs for economic transition and infrastructure

projects –e.g. Belt & Road; Panda bonds

• Enhanced bond issuance and disclosure standards

Growing International Demand

• Yield differential against developed markets

• Inclusion in emerging market bond indices

• Geographical and asset class diversification

• Growing convertibility of RMB / SDR inclusion

• More efficient access – Bond Connect

Outstanding,

USD tn Relative to GDP

20

40

US JP China DE FR UK

212%

87% 249%

146% 171% 157%

30

68%

64%

46%

41% 39% 38%

29%

13%

8%

2.6%

DE FR AU UK IT CA US RU JP China

Foreign Participation in China’s Bond Market

Sources: ChinaBond, Bloomberg, BIS

International Bond Market Comparison Foreign Participation in the CIBM

Average: 38.5%

15%

Achievable

target

Foreign participation still only ~2%, well below the international average for large bond markets

Foreign Ownership %

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

-

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Au

g-1

6

Se

p-1

6

Oct-

16

Nov-1

6

Dec-1

6

Jan

-17

Fe

b-1

7

Ma

r-1

7

Ap

r-17

Ma

y-1

7

Jun

-17

Jul-

17

Bond Holdings,

RMB trillions

As % of total

2.6%

31

Next evolution in the Mutual Market Access scheme developed by HKEX after Shanghai & Shenzhen Connect

Northbound to launch first: foreign investors can trade the China interbank bond market on CFETS(1)

Southbound to follow in due course: Mainland investors to trade in overseas OTC bond markets

Key parties:

Regulators: PBOC and HKMA

Trading: CFETS, HKEX, BCCL(2), and Recognised Access Platforms

Settlement: CMU(3), ChinaBond(4) and Shanghai Clearing House

A simple and efficient access for offshore investors

Full access to onshore bond market

Deal with familiar trading interface

Deal with familiar global custodian

Nominee structure, with fully-secured holding of onshore securities using offshore cash

A fully-fledged solution offering hedging for FX (CNH/CNY) and rates (OTC / ETD)

Launched on 3 July 2017; foreign holdings in CIBM increased by RMB37.8bn during July 2017 according to CCDC

Service fee

A Service Fee, 0.0075% of the notional value of transaction, applies to each trade executed through Bond Connect

The Service Fee shall be waived for the first six months upon launch (from 3 July 2017 to 29 December 2017)

What is Bond Connect?

(1) CFETS – China Foreign Exchange Trade System & National Interbank Funding Centre

(2) BCCL – Bond Connect Company Limited

(3) CMU – Central Moneymarkets Unit of the Hong Kong Monetary Authority

(4) ChinaBond / CCDC – China Central Depository & Clearing Co., Ltd

32

Comparison with Stock Connect

The two Connect programmes offer increased convenience for investors, while having regard to

the characteristics of the onshore bond and stock markets respectively

Northbound Bond Connect Northbound Stock Connect

“Home Market” Rules “Home Market” Rules

Regulatory Cooperation – CSRC & SFC Regulatory Cooperation – PBOC & HKMA

Leverages Existing Infrastructure Leverages Existing Infrastructure

Daily Quota No Quota

Northbound + Southbound Northbound First

Trading Link: SSE/SZSE & SEHK Trading Link: CFETS & Recognised Access

Platforms

No Investor Eligibility Requirements Investor Eligibility per PBOC Guidelines

Eligible Stocks Only All CIBM Bonds (~30,000 instruments)

HKSCC as nominee holder CMU as nominee holder

Secondary Market Primary + Secondary Market

33

Comparison with CIBM Access Scheme

Trade directly with eligible CFETS

dealers

Existing CIBM Access Scheme

Trade Counterparties

Application Process

Quota

Trading Method

Products

Trading Hours

Complicated process

Primarily voice / trade capture

No hard quota, but state investment size

Cash bonds; IRS & bond forwards for

hedging; CNY repos1

Northbound Bond Connect

Cash bonds at the initial stage; to include

repos & CNY derivatives at a later stage

Electronic RFQ

Trade via agent bank

Simplified application

Settlement Method

Settlement Cycle

Custody

Inflow Currency

T+0, T+1 and T+2

Nominee structure via CMU

CNH or other currencies

Individual account

Same

Same

No quota or estimated investment size

Eligible Investors Medium/long-term buyside investors Same

Follow Mainland market Same

Gross settlement, DVP Follow CMU arrangement

Access Model Onshore money holding onshore assets Offshore money holding onshore assets

(1) For offshore clearing banks, overseas participating banks and supranationals only

34

Agenda

Agenda

2

1 HKEX Group Financial and Market Update

HKEX Strategic Plan 2016-18

China Connectivity Update

Appendix

3

4

35

Financial Highlights – Income Statement

($ million, unless stated otherwise) 1H 2017

% of Revenue &

Other Income 1H 2016

% of Revenue &

Other Income Y-o-Y Change

Results

Revenue and other income 6,203 100% 5,630 100% 10%

Operating expenses (1,711) (28%) (1,688) (30%) 1%

EBITDA 4,492 72% 3,942 70% 14%

Depreciation and amortisation (362) (6%) (382) (7%) (5%)

Operating profit 4,130 66% 3,560 63% 16%

Finance costs and share of loss in a joint venture (70) (1%) (48) (1%) 46%

Profit before taxation 4,060 65% 3,512 62% 16%

Taxation (582) (9%) (540) (9%) 8%

Loss attributable to non-controlling interests 15 0% 13 0% 15%

Profit attributable to HKEX shareholders 3,493 56% 2,985 53% 17%

Basic earnings per share $2.86 $2.47 16%

Average daily turnover on the Stock Exchange $76.0 bn $67.5 bn 13%

Capex $306 m $266 m 15%

36

Performance by Operating Segment – 1H 2017

(1) % Share of Group EBITDA (including Corporate Items)

$ million Cash

Equity

Equity &

Financial

Derivatives

Commodities Clearing Platform and

Infrastructure

Corporate

Items

Group

1H 2017

Group

1H 2016

Revenue and other income 1,512 952 721 2,308 279 431 6,203 5,630

% of Group Total 24% 15% 12% 37% 5% 7% 100% 100%

Operating expenses (291) (222) (281) (378) (75) (464) (1,711) (1,688)

EBITDA 1,221 730 440 1,930 204 (33) 4,492 3,942

% of Group Total(1) 27% 16% 10% 43% 5% (1%) 100% 100%

EBITDA margin 81% 77% 61% 84% 73% N/A 72% 70%

Depreciation and amortisation (33) (36) (136) (92) (21) (44) (362) (382)

Finance costs - - - - - (65) (65) (43)

Share of loss of a joint venture - (5) - - - - (5) (5)

Profit before taxation 1,188 689 304 1,838 183 (142) 4,060 3,512

37

Staff cost due to

headcount and annual

payroll adjustments

1,016

251

162

46

213

382

1,073

210 176

18

234

362

- 16% + 9% - 61% + 10% - 5%

Operating Expenses and Depreciation & Amortisation

Staff costs and

related expenses

LME IT costs from

cost savings and

depreciation of GBP

Rental expenses due

to new offices

One-off insurance

recovery in 2017 relating

to LME’s warehouse

litigation and less

project related legal

expenses

Some assets became

fully amortised

1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017

IT & computer

maintenance exp Premises expenses

Legal &

professional fees

Other operating

expenses (1)

Depreciation and

amortisation

Overseas travelling

expenses and bank

charges

- 11% (excluding one-off item)

+ 6%

($ million)

(1) Includes product marketing and promotion expenses

38

304

88

(16)

0

(21)

443

19 0

327

32

82

263

10

428 382

11

Net investment income for 1H 2017

increased by 131% versus 1H 2016

mainly due to:

(1) Gains on collective investment

schemes in 1H 2017 in

particular the low volatility

equities investment category

(2) Higher net investment income

on Margin Funds due to

increases in deposit rates and

higher average fund size

Net Investment Income

1H 2017: Total $821m; 1H 2016: Total $355m

Net Investment Income by Funds

($ million)

($ million)

1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017

Clearing House

Funds

Corporate Funds Margin Funds

Debt

Securities

Collective

Investment

Schemes

Cash & Bank

Deposits Equities FX

1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017

Net Investment Income by Sources

39

678 828

371

398 200

238 33

48 1,282

1,512

Drivers of Trading and Clearing Revenue

Cash Equity

Trading fees & tariff from ADT, partly

offset by average transaction size

dampening the rate of growth in tariff

Listing fees due to listed companies

and IPOs

Market data fees due to allocated

fees from trading activity

Trading fees & tariff due to ADT of

DWs, CBBCs and warrants and ADV of

derivatives contracts traded on HKFE

Listing fees due to newly listed DWs

and CBBCs

Trading fees from ADV, fee

reduction for short-dated carries and a

position transfer fee cap from Sept 2016

Net investment income

due to Margin Funds

One-off Lehman post-liquidation interest

Clearing fees from HK ADT, partly

offset by LME ADV

791 660

160 195

109 90

5 7

1,065 952

644 561

95 91

65 69

804 721

142 131

1,187 1,224

473 459

47 101 273

393 2,122

2,308

1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017

Stock Exchange listing fees Clearing and settlement fees Depository, custody and nominee

services fees Market data fees Other revenue and sundry income Net investment income

Trading fees and trading tariff

Commodities

+ 18% ($ million)

$48.3bn

ADT

+27% $61.4bn

- 10%

635k

LME ADV

-6% 598k

Equity & Financial Derivatives

488k

Futures & Options ADV

-13% 425k

293k

Stock Options ADV

+21% 355k

- 11%

$19.2bn

ADT

-24% $14.6bn

Clearing

+ 9%

$177.6bn

SI

+15% $204.1bn

$67.5bn

ADT

+13% $76.0bn

40

Trading and Clearing Transactional Revenue by Market

Fee diversification continues following acquisition of LME and with steady growth of Derivatives Market

(1) Includes all products traded on the Stock Exchange (ie, equity products, DWs, CBBCs and warrants)

54%

17%

2%

27%

77%

18%

4%

1%

66% 12%

3%

19%

(1)

Acquisition of LME

in Dec 2012

Strong growth

of Derivatives Market

$53.9bn $69.5bn $66.9bn ADT

$3,854m $5,758m $6,786m

LME Clear

commenced operation

since Sep 2014

58% 15%

2%

25%

2012 2014 2016 1H 2017

Improved sentiment in Cash Market,

but reduced volatility impacted

Derivatives

$3,404m

$76.0bn

Revenue

Commodities Stock

Options

HKFE Futures

& Options

Cash Cash Cash Cash

(1) (1)

(1)

2015 2013

LME fee

commercialisation

since Jan 2015