Chinese Equities and Corporate Governance Issues Nanjing Hong Kong Taipei December 2011 Pacific Sun Advisors www.pacificsun.com.hk Page 1
DISCLAIMER The information contained in this document has been compiled from, or has been based upon, publications, reports and other sources believed by the author to be accurate, sufficient and reliable. While reasonable efforts have been made to ensure the accuracy, sufficiency and reliability of such information, no representation and assurance can be given that all such information is accurate and complete in all material respects and not misleading and all sources of information are reliable. The delivery of this document shall not in any event create any implication or constitute a representation or warranty that the information contained in this document is true and correct and not misleading as at any time subsequent to the date of this document. No disclosure of any such information shall be made by the recipient to any other persons in any circumstances except as otherwise compelled by applicable laws. This document does not constitute, and may not be used for the purposes of, an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorized, or to any person to whom it is unlawful to make such offer or solicitation. The distribution of this document in certain jurisdictions may be restricted and, accordingly, persons into whose possession this document comes are required to inform themselves about, and to observe, such restrictions. If you have any doubt about the contents of this document, you should consult, and obtain independent advice from, your legal, financial and/or other professional advisors. Pacific Sun Advisors www.pacificsun.com.hk Page 2
Pacific Sun Advisors Our Edge � Core Network of 7 Partners / Senior Members with 140 Years Investment and Finance-related Experience in Greater China – ALL Fluent in Mandarin Chinese � First Hand Experience in ALL Chinese Equity Market Cycles � Excellent 10+ Year Long Side Investment Track Record � Operations are Based Locally – Hong Kong and Nanjing � Registered Investment Advisor in HK and US Pacific Sun Advisors www.pacificsun.com.hk Page 3
Pacific Sun Advisors Investment Products (Pacific Sun) The China Mantou Fund • Long/short fund investing in greater Chinese equities • Focus on small and mid-cap companies • 8 year track record • Suitable for investors that require long/short strategy • Current directors include Dr. Marc Faber, David Hui, David Lee, Andy Mantel, and Chris McDonald Pacific Sun Greater China Equities Fund • Long only fund investing in greater China equities • Focus on small and mid-cap companies • Attractive 10+ year “long” investment track record • Suitable for investors with 5-10 year investment horizon • Target size of US$200mn after 3 years • Directors include Mark Fischer, Liu Xuezhong, Andy Mantel, and Carl Wegner • Launched November 1, 2011 Pacific Sun Zhongtai Private Equity Fund • Private equity/Pre-IPO fund • Focus on companies from attractive industries that will go IPO within 2-3 years of Fund’s investment • Target investment capital of US$25mn from Pacific Sun/Zhongtai • Target size of US$200mn • 1H 2012 launch date Pacific Sun Advisors www.pacificsun.com.hk Page 4
Pacific Sun Advisors Andy Mantel First and Recent Trip to Shanghai Shanghai Pudong Skyline - August 1992 Shanghai Pudong Skyline – September 2010 Pacific Sun Advisors www.pacificsun.com.hk Page 5
Liu Xuezhong Meeting Government Officials With Donald Tsang, Hong Kong’s With ZHU Shanlu, Nanjing’s Secretary Municipal Chief Executive Committee of the CPC Pacific Sun Advisors www.pacificsun.com.hk Page 6
Liu Xuezhong Meeting Investors With Andy Mantel and other international investors With Steve Forbes at World Capital Forum, hosted by Zhongtai Group in Nanjing in 2002 Pacific Sun Advisors www.pacificsun.com.hk Page 7
Pacific Sun Advisors Senior Advisors � Dr. Marc Faber - Ph.D., Economics, University of Zurich - World-renowned global investor and commentator - Founder & Editor of The Gloom, Boom & Doom Report - www.gloomboomdoom.com � Chef Martin Yan - M.S., Food Science, University of California-Davis - Certified Master Chef, a highly respected food consultant, a cooking instructor and a prolific author - Host of over 3,000 cooking shows - www.yancancook.com Pacific Sun Advisors www.pacificsun.com.hk Page 8
Greater China - The Opportunity Major Themes � Urbanization Roll Out to Support High Economic Growth � Domestic Consumption to Spur Economy � Internationalization of Renminbi � Stronger Renminbi / Hong Kong Dollar / Asian Currencies � Investment Choices to Expand Dramatically � Equity Valuations Extremely Low Pacific Sun Advisors www.pacificsun.com.hk Page 9
Greater China - The Opportunity Domestic Consumption to Spur Economy 35 % of Global Consumption 30 US 25 Japan 20 Germany 15 China 10 UK 5 France 0 2007 2008 2009 (E) 2010 (E) 2015 (E) 2020 (E) China’s domestic consumption is expected to make up 16.4% of total global consumption by 2015 and grow to 21.1% of total global consumption by 2020 (Source: IMF) Pacific Sun Advisors www.pacificsun.com.hk Page 10
Greater China - The Opportunity Investment Choices to Expand Dramatically October 2011 October 2014 Hong Kong Main Board 1,359 1,752 – including H shares and Red Chips Hong Kong Growth Enterprise Market 60 85 Shanghai A-Share 905 1,230 Shanghai B-Share 53 53 Shenzhen A-Share 1,338 1,760 Shenzhen B-Share 53 53 Taiwan Main Board 743 830 Taiwan Gre Tai Exchange 573 680 Singapore 324 465 Other Asia 312 450 US & Canada 480 730 London 75 124 Other Europe 42 88 Total 6,317 8,300 * Pacific Sun estimates Pacific Sun Advisors www.pacificsun.com.hk Page 11
Greater China - The Opportunity General Risk Factors � Geopolitical Events/Relations � Excess Liquidity and Inflation � Fraud and Corruption � Nationalism � Social Unrest � Not Investing in Greater China * * Greater China is increasingly an independent asset class in itself Pacific Sun Advisors www.pacificsun.com.hk Page 12
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