2020 Annual Results Analyst Presentation Calvin Tai Interim Chief Executive, HKEX Group Romnesh Lamba Co-President, HKEX Group Vanessa Lau Group Chief Financial Officer, HKEX Group 24 February 2021 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 ...

Financial Performance - The company reported total revenue and other income of $19.19 billion, an increase of 18% year-on-year, with core business revenue up by 24% driven by trading and clearing fees in the cash market [6][13] - Profit attributable to shareholders reached a record high of $11.5 billion, up 23% year-on-year, with earnings per share (EPS) and dividend per share also at record levels, both up 22% from 2019 [7][13] - Net investment income decreased by 18% to $2.2 billion compared to $2.7 billion in 2019, reflecting a challenging investment backdrop [7][21] Business Segment Performance - The IPO market remained strong, with the company ranking second globally, raising HKD 400 billion (approximately $50 billion), the highest in the last decade [8][34] - Stock Connect revenue reached a new record high of $1.9 billion, contributing to 10% of the total revenue, with both Northbound and Southbound average daily turnover (ADT) more than doubling compared to 2019 [19][20] - Listing fees increased by 16% with 154 new company listings in 2020, while corporate items were down due to lower net investment income [20] Market Data - The company experienced record average daily turnover (ADT) of $129.5 billion, reflecting strong market activity [13] - The Southbound Stock Connect has shown significant growth, contributing to liquidity in the market [66][71] Company Strategy and Industry Competition - The company aims to leverage the emerging new economy sector, focusing on tech and biotech stocks, which have become increasingly significant in the market [27][30] - The company is expanding its Stock Connect program and enhancing its product ecosystem, including the introduction of MSCI contracts to establish itself as a risk management center for the region [40][41] - The company is also focusing on sustainable finance, having launched the first multi-asset sustainable investment product platform in Asia [45][46] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about the strong IPO pipeline and anticipated a busy year ahead, despite potential challenges from the low interest rate environment [48][50] - The management acknowledged the impact of the recent stamp duty increase but emphasized the overall robustness of the market and the need for a comprehensive approach to maintain competitiveness [56][60] Other Important Information - The company has made significant investments in talent and technology to support growth and operational resilience, with operating expenses up 8% excluding charitable donations [23][94] - The company is working on initiatives such as ETF Connect and Asia Index Futures to enhance its offerings and meet market demand [88] Q&A Session Summary Question: Insights on the recent stamp duty tax hike - Management was not consulted regarding the stamp duty change and expressed disappointment, noting that the market's robustness is driven by various factors beyond costs [56][58] Question: Potential for further stamp duty changes - Management could not speculate on whether the stamp duty change would be one-off or if further hikes might occur, emphasizing the need to focus on current market conditions [63][65] Question: Breakdown of strong trading volumes - Management indicated that approximately 25% of the strong trading volumes are driven by new economy stocks, with overall positive market sentiment contributing to the increase [66][67] Question: Plans to mitigate the impact of increased costs - Management highlighted that while transaction costs are significant, improvements in market efficiency and execution certainty have been made, which may help cushion the impact [76][78] Question: Impact of stamp duty on investor behavior - Management believes that the recent changes will not significantly alter investor behavior, as many investors prefer trading in Hong Kong for time zone advantages [80][82] Question: Update on Southbound Stock Connect and related initiatives - Management confirmed ongoing work on initiatives like ETF Connect and Asia Index Futures, with no specific timetable yet available [88][89]