China capital markets Be prepared to seize investment opportunities

Together we thrive capital markets Be prepared to seize the investment opportunities 2

Why China? China’s economy is more open and globally connected than ever before, with a strong emphasis on trade and investment openness, and various investment channels to help investors to access its domestic capital markets.

China’s capital markets China’s equity market Internationalisation are among the biggest globally yet it is largely funded by domestic investors of RMB listed RMB is the 1,508 companies most actively China’s equity market: China’s bond market: on the Shanghai rd used currency (as of August 2019) in trade finance world’s world’s 3 (as of August 2019)

nd nd and the 2 largest 2 largest listed most active currency for (by total market cap) 2,166 companies th international on the 2 5 payments by value (as of August 2019) (as of August 2019) 3 5 Estimates of As of 2018, 1.89% of global FX reserve is allocated to USD 320bn RMB, compare with 1.23% China’s green bond market new foreign inflows into China’s bond at the end of 2017 1.89% market as a result of inclusion into three China has the China represented key global benchmark bond indexes nd Reserve managers expect 2 largest 25% to contribute 3.5% by USD 85bn 5.4% of all green bonds 2020 and 5.4% by 2025 green bond market inflows expected due to the inclusion of their reserves in RMB issued in 2018 of two key global equity indexes in the world 6 1 4

1 HSBC Reserve Management Trends 2019 4 ASIFMA and FTSE Russell August 2019 2 World Federation of Exchange, August 2019; Bloomberg, September 2019 5 Swift, July 2019 3 , August 2019; Shenzhen Stock Exchange, August 2019 6 HSBC Global Research China capital markets Be prepared to seize the investment opportunities 3

Increasing connectivity over time China is gradually opening up its capital markets, with simplified channels, enlarged quotas and easier access for foreign financial institutions and investors.

Dec 2016 2016 Shenzhen- Kong 2002 2014 China Interbank Bond Market Stock Connect launched (CIBM) Direct launched Qualified Foreign Institutional Shanghai-Hong Kong Providing access to a market Investor Scheme (QFII) launched Stock Connect launched Giving foreign financial institutions that is home to many “new access to a wide range of fixed economy stocks” in sectors Opening up China’s A-share market Providing a new route into income instruments in China’s such as technology, media to foreign investors for the first time China’s largest stock exchange bond market and healthcare

2011 2015 Oct 2016

RMB Qualified Foreign Mutual Recognition of Inclusion of RMB into the Institutional Investor Funds (MRF) launched International Monetary Scheme (RQFII) launched Fund’s Special Drawing Providing mainland China and Right currency basket RMB version of QFII officially Hong Kong products with new launched, allowing onshore cross-border mobility RMB now makes up 10.92% securities to be traded of the basket China capital markets Be prepared to seize the investment opportunities 4

What you need to know

®® China has introduced simplified channels ®® STAR market represents a step forward in to enter the CIBM the reform of the IPO system and providing ®® Stock Connect provides easier cross-border technology companies with greater access trading between Hong Kong, Shanghai and to capital Shenzhen stock markets ®® There will no longer be any quota restriction ®® Under PBOC Notice 159, foreign investors for QFII and RQFII. Foreign investors can can now easily access CNY FX to hedge now invest after necessary registrations China bonds and equities portfolio Jun 2017

Inclusion of A-shares into MSCI’s Emerging Markets Aug 2019 Index is announced STAR market represents a Sep 2019 Driving greater demand by May 2018 step forward in the reform of foreign investors for onshore Apr 2019 the IPO system and providing QFII and RQFII investment exposure Daily quota of northbound Inclusion of China bonds technology companies with quota restrictions are abolished and southbound stock connect in Bloomberg indices greater access to capital by China Safe Administration increased by 3x to RMB 52bn of Foreign Exchange (SAFE) and RMB 42bn respectively.

Jun 2018 Jan 2019 Jun 2019 July 2019

Jul 2017 PBOC Notice 159 QFII/RQFII London-Shanghai Stock A+H companies listed consultation to Connect on the STAR Market Bond Connect northbound Offshore investors can access harmonise both (‘Science and Technology Connecting the London Stock launched onshore deliverable CNY under channels and Innovation Board’) are Exchange (LSE) and the Shanghai the schemes of CIBM, Bond further relax and eligible for trading via Allowing overseas investors to Stock Exchange (SSE), allowing Connect and RQFII, with HKMA expand the scopes. Stock Connect. trade on the CIBM with their usual global investors in London to international methods via the guidance on CNY for Stock Connect released in June 2019. access shares listed in SSE via Connect platform and settle bonds Global Depository Receipt (GDR) more simply via Hong Kong and Chinese investors to buy LSE-listed stocks via China Depository Receipt (CDR) China capital markets Be prepared to seize the investment opportunities 5

Investing in China’s capital markets With the further opening up of the onshore capital market, offshore investors can now access China’s equity and bond markets via a variety of schemes. The schemes are designed for different types of investors and products.

Applicable products Eligible investors Source of fund Quota availability

®® Exchange-listed A-shares, bonds and warrants ®® Overseas asset management companies, insurance ®® FCY (converted ®® No investment ®® Fixed income products traded in interbank bond market companies, securities firms, banks, funds, government at onshore CNY) quota* QFII ®® Securities investment funds agencies ®® Only necessary ®® Index futures (for hedging only) registration ®® Subscription to initial public offerings, additional process required* issuance, rights issues and convertible bond issuance ®® The New Third Board & Sci-Tech Innovation Board (STAR Market)

®® Exchange-listed A-shares, bonds and warrants ®® Qualified financial institutions in designated offshore ®® FCY (converted ®® No investment ®® Fixed income products traded in interbank bond market RMB markets offshore at CNY quota* RQFII ®® Securities investment funds or CNH) ®® Only necessary ®® Index futures (for hedging only) ®® Offshore RMB registration ®® Subscription to initial public offerings, additional process required* issuance, rights issues and convertible bond issuance ®® The New Third Board & Sci-Tech Innovation Board (STAR Market) Inbound Investment

®® Cash bonds in interbank market, including government Sovereign entities: ®® FCY (converted ®® No quota bonds, People’s Bank of China (PBoC) bills, financial Foreign central banks, monetary authorities, international offshore at CNY CIBM bonds, commercial paper and medium-term notes financial organisations and sovereign wealth funds or CNH) ®® Derivatives such as bond forwards, bond lending, ®® Offshore RMB Non-sovereign entities: interest rate swaps and forward rate agreements Commercial banks, insurance companies, securities companies, fund management companies, other asset management institutions accepted by the PBoC, such as pension funds, charity funds, and endowment funds, etc.

*In September 2019, SAFE announced that there will no longer be a quota restriction for QFII and RQFII. The rules of implementation are yet to be released. China capital markets Be prepared to seize the investment opportunities 6

Applicable products Eligible investors Source of fund Quota availability

®® Fixed Income instruments in interbank market, including ®® Central banks, monetary ®® FCY (converted ®® No quota government bonds, PBoC bills,financial bonds, commercial authorities, international offshore at CNY paper, medium-term notes and other instruments financial organizations, or CNH) Bond sovereign wealth funds ®® Offshore RMB Connect (The initial phase of Bond Connect only supports Northbound Trading by institutional ®® Commercial banks, insurance professional investors) companies, securities firms, asset management companies, other wealth management and other financial institutions t Inbound Investmen

Northbound Northbound ®® FCY (converted ®® No market quota ®® Constituent stocks of SSE180 index and SSE380 index ®® Overseas Institutional and offshore at CNY ®® Daily quota of ®® Constituent stocks of SZSE Component Index and SZSE individual investors * or CNH) northbound and Small/Mid Cap Innovation Index with market capitalisation Southbound ®® Offshore RMB southbound stock connect are RMB China Stock not less than RMB 6bn ®® Qualified mainland investors 104bn and RMB Connect ®® Most dual-listed A and H shares on SSE or SZSE and SEHK 84bn respectively. Southbound (*ChiNext participation is limited to institutional professional investors) ®® All constituent stocks of the Hang Seng Composite LargeCap Index (“HSLI”) and Hang Seng Composite MidCap Index (“HSMI”) ®® H-shares in SmallCap index (“HSSI”) with market capitalisation not less than HKD 5bn ®® Most dual-listed A and H shares on SSE or SZSE and SEHK

®® General equity funds ®® General investors for publicly ®® Offshore RMB/other ®® N/A Two-way Investment Two-way Mutual ®® Bond funds offered funds in mainland China currencies Recognition ®® Mixed funds and offshore markets of Funds (MRF) ®® Unlisted index funds ®® Physical index-tracking exchange traded funds

China capital markets Be prepared to seize the investment opportunities 7

Accessing China’s Bond Markets

CIBM QFII RQFII Bond Connect Direct

Onshore Access Offshore Access

Foreign ownership of government bonds Index Inclusion timeline – Bond Market

(% of total market) Bloomberg-Barclays – Estimate inflows of USD 150bn

50% Mar Jan Apr Adding 5% each month Nov 2018 2019 2019 2020 41% over 20 months 40%

Inclusion plan Officially 5% 100% 30% announced confirmed

JPM GBI-EM – Estimate inflows of USD 20bn 20% 16.3% 16.8% 12.7% Sep Feb Adding 1% each month Nov 10% 8.2% 2019 2020 2020 over 10 months

0% Announced their Begins on the Completed by US Korea Japan Emerging China intention to include 28th Feb 2020 30th Nov 2020 Market China bonds into Source: Central banks and Treasury websites in respective countries its indexes Note: EMs % here is average of 17 EM countries ex China, based on end of June 2019 data. The data for Korea and China correspond to end of July 2019. For US and Japan, the data are from May 2019 and March 2019 respectively. FTSE Russell WGBI – FTSE Russell did not include China bonds in the WGBI, but will revisit the decision at the next review in March 2020. Prior estimate suggested that once China bonds are included, inflows would be USD 150bn. China capital markets Be prepared to seize the investment opportunities 8

Bond Connect: Northbound operating model

Offshore Hong Kong Mainland China

HKEX Global Custodian International BCCL1 Mainland investors dealers CFETS Global Bond Existing Access Trading Link Existing interface Trading interface Platforms System

Settlement

Nominee structure Global CMU HKMA CCDC + SCH Custodian Members CMU Settlement Link

®®International investors trade via global platforms with assets held in custody via a Hong Kong (CMU) nominee structure

Note: 1. Bond Connect Company Limited, jointly owned by CFETS and HKEX, will support and assist admission and registration for Northbound investors, and liaise closely with the international Access Platforms under Bond Connect Source: HKEx China capital markets Be prepared to seize the investment opportunities 9

Comparison between CIBM and Bond Connect

Bond Connect Northbound CIBM Direct Scheme

Eligibility and Market Entry Eligible Investors ®® Follow PBOC Notice [2016] No. 3 and Yinfa [2015 No.220 (i.e. same as CIBM ®® PBOC Notice [2016] No.3: Direct) • Fls including commercial banks, insurance, securities companies, asset managers • Other mid-term and long-term institutional ®® Investors accepted by PBOC, such as pension funds, charity funds and endowment funds etc. ®® Yinfa [2015] No.220: Foreign central banks, international organisations and sovereign wealth funds Quota ®® No quota restriction ®® No quota restriction Market entry/ ®® Investors need to submit the application directly via BCCL, the joint venture ®® Onshore account opening Registration between HKEx and CFETS set up to support and assist admission for ®® Registration at fund level Northbound investors ®® Registration process through a Bond Settlement Agent ®® BCCL will submit applications to CFETS, which in turn will submit documentation to PBOC for filing purposes ®® After receiving a successful filling notification, the CFETS shall open a trading account in its system and inform the applicant via the BCCL Investment Scope and Trading Eligible ®® Cash bonds. The permissible bonds are all types of bonds traded in the CIBM ®® Bond lending & borrowing, Bond forward, Forward Rate Agreement (FRA), Interest Northbound ®® Investors can participate in the primary market issuance Rate Swap (IRS) ((For Overseas Institutional Investors’ hedging purpose only, while Securities no restriction for central bank type investors) ®® For overseas RMB clearing banks and participating banks repo is allowed to be traded ®® QFIIs and RQFIIs are allowed to trade cash bond, bond IPO and interbank deposit Trading ®® Investors have direct access to CFETS via access platforms (Tradeweb and ®® Investor has trading account with CFETS with own name arrangement Bloomberg). The trade orders will be routed to the CFETS trading platform. ®® Through CFETS platform ®® Investors can only trade with designated bond Connect mainland dealers ®® Investors trade directly with CFETS members ®® Trading agent to conduct trade on behalf of investors Trading ®® Trading will be conducted with designated Bond Connect market-makers only ®® Investors trade directly with CFETS members Arrangement ®® Investors will need to have access to foreign electronic access platform (TradeWeb is to be used initially for Bond Connect) Hedging tools ®® CNY FX hedging is available (i.e. CNY FX forward/swap/option) ®® Bond lending, bond forward, IRS, CCS, FRA (for hedging purpose only) available ®® CNY FX hedging is available (i.e. CNY FX forward/swap/option) Trading Periods ®® The trading hours are 09:00-12:00 and 13:30-16:30 (Bejing time) on each trading day China capital markets Be prepared to seize the investment opportunities 10

Accessing China Equities

QFII RQFII Stock Connect

Onshore Access Offshore Access

% market cap of foreign investors Index Inclusion timeline – Equity Market

MSCI – Inflows could be USD 75bn over the next 2 years counting all funds tracking the index

40% 33% Jun May Aug May Aug Nov 30% 30% 2017 2018 2018 2019 2019 2019 25%

Announced 1st Tranche 2nd Tranche 3rd Tranche 4th Tranche 5th Tranche 20% 15%

10% 3.1% FTSE Russell – Initial net passive inflows of USD 10bn

0% Preliminary Preliminary US Korea Japan Emerging China Feb Jun Market 2018 2019 Sep Mar 2019 2020

Announced 1st Tranche FTSE is evaluating FTSE is Source: PBoC, CSRC, HKEX, JPX, Reuters, US Fed,TWSE,KRX st Note: China, US, HK, Korea, Japan, Taiwan and Brazil data by end of 2018, data of other after the 1 evaluating after regions by end-2016 Tranche the 1st Tranche China capital markets Be prepared to seize the investment opportunities 11

RMB: Regulatory developments PBOC Notice 159

Summary Documentation ®®PBOC Notice 159: allows offshore RMB ®®Clients are able to use existing ISDA documentation participating banks to offer onshore deliverable to face offshore RMB participating bank entities for CNY to offshore investors onshore deliverable CNY* ®®Products in scope: Spot, Forward, FX Swap, Cross ®®Clients sign ‘HSBC’s Letter of Undertaking’ to Currency Swap and FX Options confirm adherence to ‘real need’ principle and other ®®Access channels in scope: Bond Connect, CIBM, obligations RQFII, Stock Connect ®®Out of scope: QFII Control/Monitoring ®®All CNY business must conform to ‘real needs’ Benefits to investors principle ®®Reduced currency basis risk for bond investors ®®Offshore RMB participating banks must fulfil obligations (CNY preferable to CNH) to ensure transactions arise from ‘real needs’ ®®Leverage existing offshore legal documentation ®®Ensure RMB business is conducted under principles (i.e ISDA) for FX derivative products of KYC, due diligence on clients’ activities ®®Ability to execute deliverable CNY with existing ®®Monitoring large transaction flows offshore counterparty (HSBC GM desks) ®®Derivative transactions must correlate to onshore ®®Third party FX viable* investments ®®Pre-fund of USD with custodian prior to bond ®®Hedge an existing securities position (amount settlement date not mandatory and tenor) ®®Where securities are sold down, investors must adjust their hedging to match the new (reduced) *RQFII and CIBM direct access channel securities position China capital markets Be prepared to seize the investment opportunities 12

CNY FX execution by access channel (offshore offering)

Schemes Bond Connect CIBM Direct RQFII Stock Connect QFII

CNY FX ®® Access CNY FX from settlement ®® Access CNY FX from offshore ®® Access CNY FX from ®® Northbound Stock Connect Execution with execution banks in HK; or RMB participating banks offshore RMB participating investors obtain access to CNY China onshore FX counterparty ®® Access CNY FX from Offshore (under PBOC 159); or banks (under PBOC 159); or indirectly through ‘Eligible Brokers’ banks -- Not allowed RMB participating banks ®® Execution with China onshore ®® Execution with China which are: to offer in offshore (under PBOC 159) FX banks onshore FX banks • Exchange participants of Stock Exchange of HK (SEHK) • Clearing participants of the HK Securities Clearing Company (HKSCC) which are eligible to participate in the Northbound Stock Connect

Documentation Letter of Undertaking Letter of Undertaking Letter of Undertaking Operational model and documentation N/A: out of scope in to be announced PBOC Circular No. 159

ISDA with offshore RMB ISDA with offshore RMB ISDA with offshore RMB participating banks participating banks participating banks

Permitted CNY FX products Products in scope: Spot, Forward, FX Swap, Cross Currency Swap and FX Options

RMB: Onshore deliverable CNY FX execution options

Direct FX Execution* Automated FX Execution ®®Live CNY FX rates executed directly with HSBC offshore trading desks ®®3 daily execution times ®®Ability to align bond execution, spot and forward FX ®®Pre-agreed margin applied to transparent FX rate ®®Execution within CNY market hours ®®Available for clients using HSBC as Global Custodian

*For CNY FX transactions (both spot and hedging), investors need to ensure it is conducted on genuine need basis HSBC has the right to review investors’ portfolio and request unwind where necessary Note: Clients should consult their HSBC local Sales representative for availability China capital markets Be prepared to seize the investment opportunities 13

Why partner with HSBC to access China?

With our global network and in-depth local knowledge, we are uniquely qualified to fulfil the needs of corporate and institutional businesses looking to seize the huge opportunities within China’s capital markets.

Leading foreign bank in Number 1 Foreign Bank in CIBM Leading bank in Bond Connect providing China connectivity ®® HSBC is ranked No.1 foreign bank in Bond ®® HSBC China was one of the first Bond Connect HSBC China has the most banking and investment Settlement Agent (BSA) module (QFII/RQFII/ Participating Dealers and was among the first related licenses among foreign banks Direct CIBM) and in full CIBM market (as of July 2019) to trade on Bond Connect. ®® HSBC is ranked No.1 in number of clients custody ®® HSBC was recognised as a Top Dealer in 2019 Bond Connect Awards, out of the 34 participating dealers at the time. Significant market share Leading bank in in Stock Connect QFII and RQFII custody The leading foreign owned Our combined trading and custody strategy has seen HSBC is the leading onshore custodian bank in the securities company in China us capture significant Stock Connect market share where QFII and RQFII schemes, with 32.69% and 51.98% of HSBC Qianhai was the 1st majority foreign owned we hold between 35-40% of the Shanghai Connect shares market share in terms of quota under custody respectively (as of July 2019) (as of July 2019) securities company in China. It was named as the ‘China Emerging Securities Broker’ at the China Best Securities Companies Award Ceremony in Beijing in 2019. Leading bank for accessing Strong China-Access onshore CNY FX directly in local structuring products provider Highly active in Corporate Access markets across the globe ®® Investors can gain exposures to China bond ®® Over 120 group and ®® China Discovery ® ® Allow our international investors direct access to market by investing in HSBC’s China-Access products. bespoke investor trips Forum with 20 the CNY FX conversion and hedging via their local ®® Vast range of underlyings available, from China to China each year corporates HSBC entity. government bonds, ABS and ®® Flagship annual ®® Dedicated Corporate ® ® Industry leading on providing comprehensive ®® Some product types may provide financing to clients China conference Access team in CNY FX solutions for all investment schemes such as TRS and Bond Forwards. in Shenzhen with Shenzhen (CIBM, Bond Connect, RQFII and Stock Connect) 150 corporates on the back of PBOC159. China capital markets Be prepared to seize the investment opportunities 14

HSBC Qianhai

HSBC partnered with Qianhai Financial Holdings and launched HSBC Qianhai in December 2017. HSBC is the first foreign bank to open a majority-owned joint venture securities company in mainland China, providing a universal banking platform to our corporate, institutional and commercial banking clients in China and globally: ®®Investment Banking: Underwriting and sponsoring the issuance of domestic equities, including IPOs, and debt, advising on corporate mergers and acquisitions ®®Securities Brokerage: Broking ofTiming listed securities on the Shanghai and Shenzhen Stock Exchanges ®®Equity Research: Publishing research reports related to A-shares in both English and Chinese simultaneously for distribution to clients globally, which is a market first.

1. Sharing your 2. Securities brokerage – Helping clients 3. Keeping you informed strategic vision to access China’s listed securities with Global Research

We start by Providing a range of China securities High quality, award-winning understanding brokerage services research and analysis your business By leveraging HSBC’s long-established connectivity to issuers, markets Our analysts are ready to equip you with topical, relevant We recognise that the world’s and investors, HSBC Qianhai gives you world-class brokerage services, and actionable ideas and commentary. We aim to cover capital markets are complex and access to China’s exchange traded equity and fixed income markets. over 400 pure A-share companies by the end of 2020, and highly interconnected, Our broad execution capabilities and strong network can help you with a focus on the higher growth new economy sectors. and that clients with strategic enhance your market liquidity and efficiency. The research reports will be published in English and Chinese simultaneously and distributed globally, as the interests in China look to us for Our range of services includes: advice and well-established first of their kind. Insights include: ®® Connection to HSBC teams around the world in 80 countries and cash execution services. ®® Major investment themes bonds across 50 countries ®® Breaking news Only by investing the time to ®® Sales coverage on cash equities and bonds ®® Global views and local ideas understand your business’s ®® Real-time connectivity to the Shanghai and Shenzhen Stock Exchanges background, strategy, people, ®® Insight on specific opportunities ®® Execution management and update infrastructure, policies and ®® Strong connections to HSBC’s research network and ®® Research publication procedures we can provide you offshore research capabilities with the bespoke services you ®® Corporate Access services ®® Global research on the macro-economy, foreign need to achieve your goals. exchange, stocks and fixed income in existing and emerging markets China capital markets Be prepared to seize the investment opportunities 15

HSBC Qianhai

4. Extensive capabilities in 5. Experience and advice in underwriting and sponsoring Mergers and Acquisitions (M&A)

A full range of M&A advisory services ®® Holistic financing solutions Need securities underwriting We aim to offer M&A advisory services to state-owned and privately owned Chinese encompassing both the exchange and sponsoring advice? corporates, multinationals, financial sponsors and sovereign wealth funds. and interbank markets jointly with HSBC Qianhai offers a wide other HSBC entities Our experienced teams will be able to help you achieve further range of securities underwriting growth and expansion through both domestic, outbound and inbound activities including: and sponsoring expertise: ®® Facilitation of two-way cross-border financing ®® Overseas investments ®® Corporate restructurings ®® Primary equity and debt capital ®® Support for domestic issuers to access ®® M&A transactions markets the international debt markets We will also work closely with HSBC’s global M&A bankers, sector specialists and ®® Secondary equity offerings ®® Competitive debt financing solutions financing solutions teams to execute complex cross-border transactions. ®® Bespoke structured financing ®® Corporate advisory services: • Business valuation Require equity capital Experienced M&A teams with a breadth of knowledge • Negotiation markets expertise? ®® Our global M&A business is handled by specialist M&A bankers in nearly 30 countries • Pricing and structuring Our capabilities in onshore equity around the world, including some of the fastest growing emerging markets of transactions issuance complement HSBC’s leading international banking ®® Product specialists delivering on-the-ground and in-depth insights platform. This vital piece of our ®® Bankers based in the relevant country or region Looking to access China’s capital financing services covers a ®® Specialists with relevant industry expertise debt capital markets? broad range of products including: If you’re looking to raise funds from ®® Initial public offerings fixed income instruments, we can help ®® Follow-on offerings you access China’s huge onshore debt A one-stop M&A solution capital markets, one of the largest bond ®® Rights, convertible bonds, markets in the world. We offer: exchangeable bonds, Bringing together our global network and our M&A business provides a one-stop and preferred shares issues solution which will aim to help Chinese corporates, institutions and multinationals ®® Well-established international bank achieve their M&A ambitions including: with on-the-ground debt capital ®® Relevant, up-to-date market intelligence markets teams ®® Access to HSBC’s full suite of global and domestic financing and risk management products China capital markets Be prepared to seize the investment opportunities 16

HSBC’s China Cross-border Business Success ⁶ 8 QDII QDLP Outbound 21.33% 18.42% Investment ®® USD3.91bn AUC as of Jun 2019 ®® USD432mn AUM as of Jun 2019 ®® Won 15 QDII custodian deals in 2019 ®® Active market player for serving QDLPs, HSS is currently serving 5 clients as of Jun 2019

Stock 4 Mutual 5 Bilateral Connect 33.38% Recognition 58% of Funds

®® One of the market leaders in Shanghai/ ®® Acting as Trustee for 11 out of 19 HK Shenzhen – HK Stock Connect northbound domiciled funds approved for distribution Inbound since the scheme first launched in 2014 in China under the MRF scheme Investment and 2016 respectively ®® Further 10 northbound fund approvals pending (could reach total AUM > $10bn in due course)

1 2 3 Bond Connect 9 RQFII 51.98% CIBM 33.14 % QFII 32.69% (north-trading link) 28%

®® HSS has assisted to obtain the single ®® Facilitated the first overseas financial ®® Acts as QFII custodian to 8 out of 16³ ®® One of the first banks to trade with largest¹ RQFII quota granted by SAFE institution registered under the new sovereign entities currently investing in overseas institutional investors under ®® Landmark deals: direct access program⁷ as the appointed the China market as of date Bond Connect following its launch • KAsset Thailand – the first Thailand RQFII settlement agent in 2016 ®® Total approved QFIIs (as of Jun 2019): 312 • Blackrock – the first US RQFII ®® HSBC was the first foreign-invested bank ®® Best QFII Custodian (2014-2018) The licensed by PBOC to provide integrated Asset Triple A Asset Servicing, Investor • CIMB-Principal – the first Malaysia RQFII trading and settlement services in CIBM, and Fund Management Awards • First RQFII custodian bank in Ireland almost 12 months ahead of others ®® 100% success rate in QFII application and Japan

Notes: 6. Qualified Domestic Institutional Investor (QDII). The total AUM of all funds under HSBC as custodian (offshore) is used to 1. Market share in terms of total approved RQFII quota as of Jun 2019. Source: SAFE/CSRC website compare with the total AUM of QDII funds custodian in the market (offshore). As of Jun 2019. in terms of services provided by 2. Market share in terms of no. of CIBM clients (excluding foreign central banks, international financial institutions) end of Jul 2019, HBAPSource: Fund Management Company’s website and AMAC’s website (Asset Management Association of China) per PBOC website 7. Under PBOC Announcement No.3 [2016]. Source of the two bullets under CIBM: HSBC China 3. Market share in terms of No. of QFII as of Jul 2019. Source: SAFE/CSRC websites 8. Qualified Domestic Limited Partnership (QDLP). In terms of number of QDLP clients won. As of Jun 2019. Source: HSBC internal 4. As of Jul 2019, Custody and sovereign wealth funds AUC only, in terms of the services provided by HSBC Securities Direct source and SFO (Shanghai Municipal Government Financial Services Office) Custody Hong Kong 9. As of date: Jul 2019. Market share in terms of account opening request received by HSBC divided by total number of registered 5. Act as Trustee for 11 out of the 19 HK funds approved to be distributed in China, market share = (11/19) x 100, in terms of the institutional investors under Bond Connect, in terms of the services provided by HSBC Securities Direct Custody Hong Kong. services provided by HBAP. Source of all figures under Mutual Recognition of Funds: SFC/CSRC websites Source: Bond Connect website China capital markets Be prepared to seize the investment opportunities 17

Key industry awards recognizing HSBC’s strength

Asiamoney Global RMB Poll 2019 Asia Asset Management Best FinanceAsia Achievement Awards 2018 of the Best Awards 2019 ®® Best overall global RMB products/services ®® Best Belt and Road Bank ®® Best overall offshore RMB products/services ®® Best RMB Manager ®® Best overall onshore RMB products/services (all providers) ®® Best RMB in foreign exchange FinanceAsia Country Awards for Euromoney Awards for Excellence 2019 (offshore and onshore) Achievement 2018 ®® Best CNH derivatives (offshore) ®® Hong Kong’s Best Bank ®® Best CNH research and analytics ®® Best International Bank – China (offshore) ®® Asia’s Best Bank for Financing ®® Asia’s Best Bank for Sustainable Finance FX Week Best Banks Awards 2018 The Asset Triple A Asset Servicing, Institutional Investor and Insurance Awards 2018 ®® Best Bank for the IFR Awards 2018 28% ®® Best RMB Bank – UK ®® Best RMB Bank – USA ®® Bond House of the Year ®® Best RMB Bank – Germany Asiamoney New Silk Road ®® Asia Bond House of the Year ®® Best RMB Bank – Malaysia Finance Awards 2018 ®® Best International Custodian – China ®® Best CIBM Direct Custodian – China ®® Best Research House for BRI ®® Best Subcustodian – China ®® Best Bank for BRI-related financing in the GlobalRMB China Capital ®® Best QFII Custodian – China region – South East Asia Markets Awards 2018 ®® Best RQFII Custodian – China ®® Best International Bank in the Region for BRI – Middle East and Africa ®® Best G3 bond house for Chinese issuer China capital markets Be prepared to seize the investment opportunities 18

Published: October 2019 For Professional Clients and Eligible Counterparties only. Not for Retail Customers. Issued by HSBC Bank plc 8 Canada Square, London E14 5HQ

Authorised the by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority.