Investing in China's Financial Markets II:
New Players in a Changing Investment Climate
Monday, September 22, 2003, New York City

8:00 am Registration & Breakfast
8:30 am Welcome Remarks

8:35 am Panel One
Sizing Up the Last Year of Reform: What Investors Need to Know

What are the key developments in the past 12 months in China's financial markets, both domestically and with respect to foreign participation? More than a year after China's entry into WTO, to what extent has it delivered on its commitments to reform the financial system and create new opportunities for foreign financial institutions to participate? China's domestic capital markets have continued to suffer from the doldrums, and many international investors continue to think A-shares are overvalued and distrust local disclosure and corporate governance standards. What progress has been achieved in building the institutions to permit China's domestic capital markets to attain the trust of international investors? To what extent will new regulations such as the qualified foreign institutional investor scheme (QFII) impact the domestic markets? How has China's currency regime changed to accommodate these various reforms, and how will these reforms impact the gradual liberalization of the renminbi over the long term? What impact would revaluation of the yuan have on China's financial markets? What are the implications of recent proposals to allow offshore RMB trading in Hong Kong? To what extent is China living up to its commitments to allow foreign financial institutions to gain access to the domestic financial markets? What are the most effective entry strategies for foreign commercial banks, insurance companies, fund management firms and other institutions to establish a domestic foothold, and what are the new services they can now offer through these operations? What new reforms are expected in the coming months? With the changing of the guard in Beijing, what do we know about China's new generation of economic decision makers and financial regulators?

Speakers:
Zhu Li, President, China Galaxy Securities Co. Ltd.
Hu Shuli, Managing Editor, Caijing Magazine
Chen Zhiwu, Professor of Finance, Yale University
Karen Sutter, Director, Business Advisory Services, US-China Business Council
Moderator: Daniel Rosen, Adjunct Professor, Columbia University

10:00 am Coffee Break

10:20 am Panel Two
Cleaning Up the Banking System: Toward a Resolution of the NPL Problem

An overhaul of China's domestic commercial banking system will be an essential step toward efficient capital allocation in China, and China's leaders know major reform must begin with the resolution of its non-performing loan (NPL) problem. NPLs could represent a potential opportunity for foreign investors, and several have recently entered negotiations to buy the assets from asset-management corporations (AMCs). Yet the actual sales of the assets to foreign investors have not been happening as quickly as hoped. How can the process speed up? When will the regulatory framework catch up to the negotiation process to ensure that investors have legal protection? What has the experience been like for foreign investors looking to buy? Some AMCs have adopted a large portfolio auction approach, while others are more interested in negotiated sales of smaller groups of assets. Which approach will prevail or yield better results? How are domestic banks changing to work toward international levels of competitiveness? What immediate impact will the newly established China Banking Regulatory Commission (CBRC) have on the domestic banking industry and on the NPL situation? With most of China's NPLs unlikely to be transferred to the AMCs, what strategies are China's big commercial banks implementing to resolve the remaining NPLs themselves? To what extent does their inability to price risk hamper their ability to lend profitably, and when will that change?

Speakers:
Yang Kaisheng, President, China Huarong Asset Management Corporation
Ma Wen, China CINDA Asset Management Corporation
Robert Zulkoski, CEO, Colony Capital Asia-Pacific
Ernest Napier, Managing Director, Standard and Poor's Corp.
Speaker and Moderator: Howard Chao, Chair, Asia-Pacific Practice, O'Melveny & Myers

11:45 am Panel Three
China in the International Capital Markets: An Opportunity in a Bear Market?

As one of the few countries in the world with companies that have a realistic chance to do international IPOs this year, China may offer a rare opportunity for investors and investment bankers in an otherwise dismal global investment climate. But with China's 2002 IPOs rather disappointing and the first half of 2003 hampered by the SARS crisis, the future of China's privatization plans is cloudy. How will future offerings fare? Which companies and industries will be coming down the pipeline? What is the anticipated number of companies and size of dollar value of Chinese IPOs in the next year? What kinds of Chinese companies will be going public internationally? Will it continue to be large state-owned enterprises, or will there be smaller, more nimble companies in the mix as well? Will international equity markets offer much-needed capital to private firms in China? What is the impact of stricter transparency and governance regulations in the New York Stock Exchange on potential Chinese listings? Does Hong Kong present similar challenges? What are the pros and cons of listing in Hong Kong versus New York?

Speakers:
Xu Xiaonian, Managing Director and Head of Research, China International Capital Corp.
David Cheng, Global Head of Investment Banking, BOCI Asia Limited
Wei Christianson, Managing Director, Investment Banking, CSFB China
James Shapiro, Vice President, International Client Listings, New York Stock Exchange
Moderator: Dan Schwartz, Chairman, Asian Venture Capital Journal

1:00 pm Luncheon

1:40 pm Luncheon Keynote
The CSRC's View of China's Domestic Capital Markets

What is the CSRC doing to make domestic equity markets healthier? What is the CSRC's strategy for making the domestic market a trustworthy investment destination, without dampening its prospects for growth? Does the CSRC see domestic and international listings as equally positive ways for domestic companies to raise capital? How will it decide which companies to send abroad for capital and which companies it will allow to list domestically? To what extent is the CSRC getting more effective at regulating domestically listed firms and enforcing standards of transparency and governance? Is the CSRC concerned about the increasing difficulty that domestic securities and brokerage firms have making money?

Keynote Speaker:
Laura Cha, Vice Chairman, China Securities Regulatory Commission

3:00 pm Panel Four
The Arrival of a Wider Class of Foreign Institutional Investors

Recent reforms have opened up new opportunities for foreign investment, and as a result, different classes of institutional investors have begun to enter the market to varying degrees. These foreign firms run the gamut from portfolio investors such as fund mangers and insurance companies to direct investors such as private equity firms and real estate investment funds. How are these investors faring? Has their experience been positive enough to encourage other investors to enter the market? How much real interest will the QFII system generate with international portfolio investors in China, given the limited international interest in B Shares, the burdensome size requirements, and limitations on re-sales? Is China beginning to make sense as a destination for private equity investment? How is the environment for the various types of private equity investors (traditional private equity firms, VC firms, distressed asset investors, real estate funds, etc.), who are skeptical but see China as one of the few areas of real growth in this current environment? In the wake of the U.S. corporate governance crisis, international investors are focusing on issues related to transparency and best practices, more than ever before. What is the state of corporate governance in publicly listed firms, and is it improving? Are private firms making enough progress in their bookkeeping and management practices to be considered viable investments?

Speakers:
Howard Zhang, Partner, O'Melveny & Myers
Carl Walter, Managing Director and Chief Operating Officer for China, JP Morgan
Young Guo, General Partner, IDG Ventures
Moderator: Terry Cooke, Senior Fellow, Foreign Policy Research Institute

4:25 pm Closing Remarks

4:30 pm Conference Ends

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Asia Society, Business Programs
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Links to other China conferences

International Finance Forum
October 28 - 30, 2003, Beijing, China