SSE Newsletter. October Vol. 29. Highlights:

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1 Vol. 29 SSE Newsletter October 2015 Highlights: SSE Composite rose by 10.80% in October 2015, while trading volume showed significant increase compared with that of the previous month SSE, Deutsche Boerse Group and CFFEX signed a tripartite shareholders agreement on setting up the China Europe International Exchange AG (CEINEX) SSE solicited opinions on the SSE Detailed Implementation Rules for Management on Program Trading (Exposure Draft) from the public CSRC solicited opinions on the Rules for Program Trading in Securities and Futures Markets (Exposure Draft) from the public CSRC published the 2014 Accounting Supervision Report on the Annual Reports of Listed Companies

2 1. Overview of SSE Market For the last 12 months (November 2014 October 2015), the SSE Composite Index reached the highest at (closing price, same below) on June 12 th, 2015 and the lowest at on November 7 th, In October 2015, the index rose by 10.80%. There have been 243 trading days from November 2014 to October The daily average turnover value was USD billion for the period. The single day turnover value peaked at USD billion on June 8 th, 2015 and reached the lowest at USD billion on November 20 th, The daily average turnover was USD billion for October 2015, which showed a significant increase compared to that of the previous month. In terms of industry-wide accumulated turnover of October 2015, the top 3 sectors were Manufacturing (USD billion), Finance & Insurance (USD 88.5 billion), and Real Estate (USD 66.1 billion).

3 For the last 12 months (November 2014 October 2015), the monthly average number of new A share accounts was 3,041,000. The single month number of new accounts peaked at 7,198,600 in April 2015, and reached the lowest at 558,200 in November As of October 2015, the total number of A-share accounts was million. In October 2015, the daily average trading volume of ETF was USD 5.96 billion, which represented an increase of 93.15% compared with USD 3.09 billion in September The volume reached its highest point at USD 8.21 billion on October 23 rd, 2015 and the lowest at USD 4.58 billion on October 9 th, 2015.

4 2. SSE Updates On October 29 th, the (SSE), Deutsche Borse Group and the China Financial Futures Exchange (CFFEX) signed in Beijing a tripartite shareholders agreement on setting up a joint venture, which was witnessed by Chinese Premier Li Keqiang and German Chancellor Angela Merkel. The set-up of the joint venture one year after the launch of the Shanghai-Hong Kong Stock Connect shows the determination and courage of China to push forward the two-way opening-up of the capital market and the internationalization of RMB. The company will be named China Europe International Exchange AG (CEINEX). According to the agreement, the SSE, Deutsche Borse and the CFFEX will jointly invest RMB200 million at 40%, 40% and 20% respectively to set up the new company. The company will be headquartered in Frankfurt, Germany. Gui Minjie, Chairman of the Board of the SSE, will serve as Chairman of the company s 1 st supervisory board, and Carsten Kengeter, CEO of Deutsche Borse Group, will serve as Vice Chairman. In early 2013, the senior executives of the SSE and Deutsche Borse proposed to set up an offshore RMB trading platform in Europe, and the CFFEX joined in the program later. After two years of research and discussion, the tripartite cooperation plan gradually took shape and was supported and recognized by the regulators and the governments of the two countries. The plan was officially announced at the China-Germany High-Level Financial Dialogue held on March 17, The establishment of the company marks the implementation of an important achievement of the dialogue. The CEINEX has been designed to develop a trading and pricing center for offshore RMB assets in Europe, to meet the demands of the investors for financing and investing in RMB, to create a comprehensive risk management service platform, and to function as an important overseas extension and supplement to the domestic capital market. At the early stage, the CEINEX is planned to focus on developing cash products, which will be denominated and settled in RMB. When the time is ripe, CEINEX will also list financial derivatives. The first batch of cash products are expected to be officially listed in Frankfurt on November 18. On October 9 th, the SSE announced that it had drafted the SSE Detailed Implementation Rules for Management on Program Trading (Exposure Draft), in order to implement the requirements of the China Securities Regulatory Commission (CSRC) on strengthening management on program trading in securities and futures markets, standardize program trading, safeguard normal trading order, and protect investors legal rights and interests. The SSE solicited opinions from the public. The Detailed Rules are special rules focused on elements of program trading that require special management, in addition to the general regulatory requirements on trading of stocks and stock options stipulated by SSE s Trading Rules and Trading Rules for Stock Options Trading Pilot Program. The Detailed Rules come in 9 chapters and 52 articles, making detailed provisions on registration, system connection, net buy quota, trading activities, trading abnormity, self-regulation, and differentiated fee structure, etc.

5 3. Key Statistics of China CPI has remained at a low level in the last twelve months. The YoY growth rate of CPI was 1.96% in August 2015, which is the peak during the period. CPI decreased to 0.76% in January 2015, the lowest during the period. From November 2014 to October 2015, M0 generally remains stable and is at USD 0.95 trillion in October M2 increased steadily, rising from USD 19.2 trillion in November 2014 to USD 21.6 trillion in October Ratio of raised funds on China s exchange market to amount of new loan was volatile. The average in the past 12 months was 9.4%, with the highest at 18.8% in June 2015 and the lowest at 2.8% in January 2015.

6 4. Updates on China s Capital Market On October 9 th, the China Securities Regulatory Commission (CSRC) announced that it had organized to draft the Rules for Program Trading in Securities and Futures Markets (Exposure Draft) in order to strengthen regulation on securities and futures markets, regulate program trading activities, safeguard market order, and protect legal rights and interests of investors. The CSRC solicited opinions from the public. The Rules, in 25 articles, clarified the definition of program trading as trading activities that involve automatic production or execution of trading orders through fixed programming or specific software, and established regulatory rules including reporting and examination. The main contents of the Rules include: first, establishing reporting and examination system; second, strengthening management of system connection; third, establishing order examination system; fourth, implementing differentiated fee structure; fifth, strictly regulating use of overseas servers; sixth, strengthening surveillance and enforcement. In addition, the Rules also made requirements on other items related to program trading. The making of the Rules is an important measure by the CSRC to organically combine market stabilization, restoration and construction, and improved the current market regulatory system. The CSRC will release the Rules shortly after revision based on the opinions and advice from all involved. The exposure draft can be found at: ds On October 23 rd, the CSRC published the 2014 Accounting Supervision Report on the Annual Reports of Listed Companies. As of April 30 th 2015, all but one of the 2613 listed companies in Shanghai and Shenzhen markets in 2014 had released 2014 annual report and internal control report. In order to understand the execution of accounting standards, internal control, and compliance of financial information disclosure, the CSRC organized personnel to examine a sample of 520 listed companies financial report, internal control evaluation report and auditing report for 2014, and composed the 2014 Accounting Supervision Report on the Annual Reports of Listed Companies based on the examination. In general, listed companies were able to understand and follow corporate accounting rules, internal control standards and relevant financial information disclosure rules relatively well, but there were still a number of companies that had problems of incorrect accounting treatment and noncompliance in financial information and internal control information disclosure. The CSRC will continue to guide the listed companies to improve their quality of financial information disclosure, and further improve the system of information disclosure standards in the multi-tiered capital market according to the requirements of capital market reforms.

7 5. QFII, RQFII & QDII As of October 29 th, 2015, the approved quota for QFII, RQFII and QDII were USD billion, USD billion and USD billion respectively. The newly approved quota for QFII and RQFII in October 2015 were USD 0.20 billion and USD 1.27 billion respectively. There was no newly approved quota for QDII. 6.Shanghai-Hong Kong Stock Connect In October 2015, the average daily quota usage percentage for Shanghai Stock Connect was -1.02%. The daily quota usage percentage on October 8 th was 31.85%, which was the peak during the period. The daily quota usage percentage on October 29 th was %, the lowest during the period. In October 2015, the average daily quota usage percentage for Hong Kong Stock Connect was 1.21%. The daily quota usage percentage on October 30 th was 3.16%, which was the peak during the period. The daily quota usage percentage on October 8 th was -6.35%, the lowest during the period.

8 You may sign up for a free subscription to this newsletter by sending your name, company name, job title and telephone number to: globalbusiness@sse.com.cn. Please feel free to contact Mr. Wen Hu at , or send an to wenhu@sse.com.cn if you have any query. Disclaimer This newsletter is provided by the (hereinafter referred to as SSE ) and intended only for those whom it is addressed to. Any unauthorized quotation, reprinting and/or distribution to a third party may be held legally liable. The contents and comments herein are for information purposes only and SSE makes no guarantees of their accuracy and completeness. The contents, comments and forecasts are subject to change at any time by SSE without prior notice. SSE holds the copyright of this newsletter and reserves all rights. Any reproduction, replication, quotation and/or reprinting by any individual or entity is prohibited without prior written consent of SSE; otherwise, SSE reserves the right to take any legal action at any time. No. 528 South Pudong Road, Shanghai, , P. R. China