Index

A AllianceBernstein Great China ’97, 353 Allianz, 73 Abandonment, as exit strategy, 146 Amaranth Advisors, 264–265 ABN Amro, 73 Amazon.com, 299 Account fees, 352 American depositary receipts (ADRs), Accounting fees, 199 334–348 Accumulation phase ( life cycle), advantages, 343–345 319 cancellation, 192, 339 Actively managed mutual funds, 259, capital raised through and trading value 363 of, 337 Administrative corruption, 89 Chinese companies listed in U.S., ADR Composite Index, 344 334–336 ADRs. See American depositary receipts filing requirements and trading, 344 (ADRs) growth of, 334, 336 Advance/decline (A/D) line, 308 issuance, 192, 337, 339 After hours trading, 293 Level I, 192–193, 340 Aggressive growth COPYRIGHTEDfunds, 363 Level MATERIAL II, 193, 340–341 Agreement on Textiles and Clothing, 26 Level III, 193, 341, 343 Agricultural Bank of China (ABC), 115, requirements, 339–343 120 listing requirements at NYSE, Agricultural Development Bank of China 342–343 (ADBC), 121 offer and bid price calculations, 346 Agriculture related industries, 19, 26, 272, Rule 144A, 193, 343 471–472, 481, 486 sponsored, 192–193, 340–343, 344 AIG, 46, 48 structure, 338, 339 AIM China, 353 trading, 345–347

539 540 INDEX

American depositary receipts (ADRs) opportunities for foreign institutions, (continued) 254–256 unsponsored, 192, 339–340, 344 overview, 250–254 U.S. regulations, 347–348 Chinese fund categories and regulations, registration of ADRs for new shares, 251–252 348 development of China fund industry, registration of ADRs for outstanding 251 shares, 347 types of investment management, Regulation S, 348 252–254 American Exchange (AMEX), 195, real estate investment trusts, 254, 266–267 335, 505–510 Asset management companies (AMCs), 28, Anticorruption measures, 90–92 116, 119, 121 Arbitrage: Asset segregation, 320 between ADRs and underlying shares, Asset swaps, 237 339 AstraZeneca, 67 convertible, 302 Automobile market, 55–58, 277 exchange-traded funds, 372–373 Average directional indicator (ADI), 306 risk, 177–178 Aviation industry, 271–272, 479 stock trading styles, 324 Architectural, engineering, and urban planning services, 20, 272 B Article 14 of Detailed Rules for The Implementation of the Law on Wholly Back-end load, 259 Foreign-Owned Enterprises, 94–95 Baidu, 335–336 A shares, 38, 39, 53, 54, 122–125, 180, Balanced funds, 364 181, 185, 186, 189, 191, 254, 256, Banking markets: 352, 380 in 2005 and 2008, 37 Asian exports into China, 10 Big Four banks, 120 Asset acquisition, 164 entry by foreign financial institutions, Asset allocation, 260–261 32–34, 122 dynamic, 260, 280–281 and foreign direct investments, 55 mutual funds, 357–358 law, 95–96, 390–399 strategic, 260, 279–280 opening of, 30–38 tactical, 280 opportunities and challenges, 34–38, Asset allocation funds, 366 119–122 Asset-backed securities, 240–244 overview, 5 Asset integration, 319 policy banks, 121 Asset management business, 250–267 reforms, 31–32, 121–122 exchange-traded funds, 253–254, second-tier commercial banks, 121 261–262 trust and investment corporations, 121 hedge funds, 254, 262–266 WTO commitments, 20–21, 26, 28, 273 management style, 264–265 WTO membership, 30–38 performance, 265–266 Bank of America, 33 structure, 262–264 Bank of China (BOC): open-end mutual funds, 256–261 banking industry reforms, 31, 32, 121, 122 fees and expenses, 258–259 as Big Four bank, 37–38 selection and asset allocation, 260–261 currency swaps, 210 share pricing and performance, 258 foreign investment in, 33, 39 INDEX 541

listing in Hong Kong, 34 Capital asset pricing model (CAPM), opening account at, 103 330–331 overview, 115, 120 Capitalization changes, 171 Bank of China International, 40, 125 line, 322–324 Bank of New York, 337, 344 Carrefour, 62–63 Bankruptcy, 145 Cash accounts, 283–284 Basis trades, 289 Catalog for Guiding Foreign Investment in Behavioral decision research, 320 Industries, 163 Beijing business culture, 80–81 CBRC (China Banking Regulatory Beijing Olympics 2008, 21–23, 91–92, 272 Commission), 95, 96, 102, 115 Best efforts agreement, 193–194 CCB. See China Construction Bank Biased expectations, 320 (CCB) Bid-asked spread, 286 Centralized corruption, 89–90 Big Four banks, 120 Central T-bond Registration and BOC. See Bank of China (BOC) Settlement Co., 202, 209 Bond anticipation notes (BANs), 220 CEPA. See Hong Kong Closer Economic Bonded areas, 14 Partnership Agreement (CEPA) Bond funds, 364–365 CFA Institute, 316 Bond market. See Fixed-income securities Challenges. See Opportunities and underwriting challenges Book value approach to valuation, Change in Tariff Heading rule, 107 175–176 Chery Auto, 58, 277 Bottom-up investing, 325 China Banking Regulatory Commission Branch offices, 110 (CBRC), 95, 96, 102, 115 Breadth advance decline (BAD), 308 China Construction Bank (CCB): Breakup valuation technique, 174–175 banking, 31, 32, 33, 37–38 Bribery, 90. See also Foreign Corrupt banking industry reforms, 121, 122 Practices Act: Antibribery Provisions currency swaps, 210 Bridge loans, 177 foreign investment in, 39 Broadcasting and film industries, 487 joint venture with Morgan Stanley, 38 Brokerage services, 291–293 overview, 120 Brokers, 283 China Development Bank (CDB), 121 B shares, 53–54, 122–124, 134, 179–181, China Insurance Regulatory Commission 186–187, 189, 191, 255 (CIRC), 20, 47, 48, 102, 129–130 Building materials and equipment and China International Capital Corporation other non-metallic minerals industry, (CICC), 38 477–478, 484 China International Trust and Investment Bundling, 339 Corporation (CITIC), 121, 161 Business card presentation, 79–80 China Life, 29 Business culture, 79–83 China Mobile, 70, 71 strategy, 280, 281 China National Interbank Funding Center Buyout funds, 157–159, 253 (CNIFC), 202, 209 China National Petroleum Corporation, 161 C China Netcom, 71 China Railcom, 72 Callable bonds, 224 China Reinsurance Corporation, 20 Call market, 288 China Satcom, 72 542 INDEX

China Securities Regulatory Commission Commercial Bank Law, 120 (CSRC): Commercial banks, second-tier, 121 banking, 96 Commercial insurance, large-scale, 45 mutual funds, 251, 252 Commercial paper, 222–223 qualified foreign institutional , Commission brokers, 283 254, 256 Commissions, 286, 375–376 reform measures, 181–182 Commodity price swaps, 238–239 representative offices, 103 Communications industry, 52, 472–473, underwriting , 185–187 481, 482, 487 China’s Law on Chinese-Foreign Communist Party of China (CPC), Contractual Joint Ventures, 90–91 492–496 Comparable company approach to China’s Law on Chinese-Foreign Equity valuation, 174 Joint Ventures, 488–491 Comparables method to private equity China Southern Fund Management, 40 valuation, 147 China , 181–190. See also Comparable transaction analysis, 174 Stock underwriting Competitive bids, 213–214 process and listing requirements, Confidentiality agreements, 173 184–189 Consolidation phase (investor life cycle), process, 184–185 319 requirements, 185–187 Constant growth model, 329 Shanghai Constant mix strategy, 280, 281 requirements, 187–189 Constant proportion portfolio insurance rationale for going public, 183–184 strategies (CPPI), 280–281 advantages, 183 Constitution, 85–86 disadvantages, 183–184 Consumer spending, 60–61 Shenzhen Stock Exchange, 189 Contingent payments, 176–177 unique features of Chinese initial public Contractual joint ventures, 104, 144, offerings, 182 492–496. See also Joint ventures China Telecom, 70, 71 Convertible arbitrage, 302 China Unicom, 70, 71–72 Convertible bonds, 205, 223–224 CIRC (China Insurance Regulatory Convertible stocks, 176 Commission), 20, 47, 48, 102, Cooperative joint ventures, 54, 162. See 129–130 also Joint ventures Citibank, 32, 34, 122 Copyright law, 77–78 Citigroup, 38, 40, 73, 122, 273 Corporate bonds, 126, 127, 205, 206, Civil Aviation Administration of China, 223–224 103 Corporate strategic planning, Civil servants, 87–88 169–170 Closed-end funds, 250, 253, 369, 371 Correlation coefficient, 322 Closer Economic Partnership Agreement. Corruption, 86–92 See Hong Kong Closer Economic anticorruption measures, 90–92 Partnership Agreement (CEPA) Beijing Olympics 2008, 91–92 Coal industry, 473 causes, 87–88 Coastal economic open zones, 14 as challenge, 74–75 Colors, symbolism of, 79–80 types, 88–90 Columbia Greater China, 353 Counterfeiting, 76–77 INDEX 543

Coupon rolls, 217 forwards and futures, 232–236 Coupon stripping, 211 exchange-traded currency futures, Creation units, 371–372 235–236 Credit default swaps, 244–245 forwards, 233–235 Credit derivatives, 244–247 spot market trading, 233 Credit enhancement, 242 overview, 227–228 Credit-linked notes, 247 repurchase agreements, 228–232 Credit rating, 206–207, 242 mechanics and market practices, Credit spread options, 245–246 230–231 Crossing networks, 288 specials, 232 CSRC. See China Securities Regulatory triparty repos, 229–230 Commission (CSRC) structured notes, 247–249 Cultural differences, 75–76 dual index notes, 248–249 Currency futures, exchange-traded, floaters, 247–248 235–236 Index-Amortizing Notes, 248 Currency swaps, 210, 237–238 inverse floaters, 248 range notes, 249 step-ups, 248 D swaps contracts, 236–240 commodity price swaps, 238–239 , 301, 376–377 currency swaps, 237–238 Dealer market, 288 equity swaps, 239 Decision-making theory, classical, interest rate swaps, 236–237 319–320 real estate swaps, 239–240 Demographic shifts, 326 Detailed Rules for The Implementation Depositary banks, 337 of the Law on Wholly Foreign-Owned Depositary receipts, 191–193, 348. See also Enterprises, 94–95 American depositary receipts (ADRs) DIAMONDs, 371, 372 Deregulation, 87 Differentiation strategy, 327, 328 Derivatives markets and risk management, Direct acquisition, 163–164 227–249. See also Provisional Directional movement indicator (DMI), Administrative Rules Governing 306 Derivatives Activities of Financial Disclosure, 220–221, 221–222, 355, Institutions 412–414 asset-backed securities, 240–244 Discount brokers, 291 benefits and costs, 242–244 Discounted cash flow (DCF) method, credit enhancement, 242 147, 174, 328–330 credit rating, 242 Diversification, 170, 321, 357, 358, 374 originator and collateral, 240–241 reinvestment policy, 378–379 securitization structure, 240, 241 Dollar-cost averaging, 376, 377 servicing, 241–242 Dollar value of an 01 (DV01), 218–219 special purpose vehicle, 242 Dongfeng Motor Corporation, 55, 58, 277 credit derivatives, 244–247 Dreyfus Premier Greater China, 353 credit default swaps, 244–245 Dual index notes, 248–249 credit-linked notes, 247 Due diligence, 141–142, 167, 185 credit spread options, 245–246 Dutch auction, 214, 216 total return swaps, 246 Dynamic asset allocation, 260, 280–281 544 INDEX

E power, 473 service, 479 Earnout-contingent payments, 176–177 textile, 472 Eaton Vance Greater China Growth, 353 transport, post and communications, eBay, 298, 299 472–473 Economic analysis, 326 Energy, 274–275 Economic reforms, 4, 6 Enhanced indexing, 366 Economy overview, 3–23 Entering Chinese markets, 101–111 Beijing 2008 Olympics, 21–23 Hong Kong CEPA (Closer Economic foreign exchange reserves, 11–13 Partnership Agreement), 107–111 global powerhouse, 3–6 setting up in Hong Kong, 110–111 economic development, 4–5 trade and investment facilitation, 109 profit from burgeoning growth, 5 trade in goods, 107–108 international trade, 7, 9–11 trade in services, 108–109 special economic zones, 13–15 and WTO, 109–111 World Trade Organization membership, joint ventures, 103–104 15–21 contractual joint ventures, 104 process leading to membership, 16–19 equity joint ventures, 103–104 regulatory changes, 19–20 potential vehicles for investing in China, status of China’s WTO commitments, 101–102 20–21 industries in which to invest, 102 Education, 273–274 real investments, 101–102 , 322–323 trade and investment zones, 102 Electronic communications networks representative offices, 102–103 (ECNs), 291–292 wholly foreign-owned enterprises, Electronic industry, 476–477, 480, 104–107 483–484 application procedures, 106–107 Elliot waves, 309, 310 setting up, 104–106 Embezzlement, 90 Environmental technologies, 274 Emerging markets, 279 Equity income funds, 364 Encouraged industries, 471–479 Equity joint ventures, 54, 103–104, 162, agriculture related, 471–472 488–491. See also Joint ventures aviation, 479 Equity REITs, 267 building related, 477–478 Equity swaps, 239 coal, 473 ETFs. See Exchange-traded funds (ETFs) electronic, 477 European Union (EU), 17, 18, 29 export products, 479 Exchange fees, 259, 351–352 ferrous metallurgy, 474 Exchange rate, 278–279 light, 472 Exchange-traded currency futures, machinery, 476 235–236 medical equipment, 478 Exchange-traded funds (ETFs), 368–382 mergers and acquisitions, 163 on American Stock Exchange, 505–510 newly emerged, 479 arbitrage, 372–373 non-ferrous metallurgy, 474 asset management business, 253–254, petroleum, petrochemical and chemical, 261–262 474–475 benefits, 373–375 pharmaceutical, 478 China ETFs, 379–382 INDEX 545

creation, 371–372 policy banks, 121 disadvantages, 375–378 reforms in the banking industry, expense ratios, 373, 378 121–122 versus mutual funds, 369, 371, 372, second-tier commercial banks, 121 373–375 trust and investment corporations, 121 overview, 356 reforms, 134–135 redemption, 372 financial system, 115–117 tracking errors, 368–369, 378–379 foreign exchange markets, 132–133, 135 types, 369–371 insurance markets, 126, 128–132 Exchange trading of bonds, 203 brief history, 129–130 Exit strategies, 142–146, 156–157 changes under WTO, 131–132 Expense ratios, 373, 378 foreign insurers in China, 130–131 Exponential moving average (EMA), market potential for foreign insurers, 304–305 128–129 Export-Import Bank of China (Chexim), People’s Bank of China, 117–119, 120 121 interest rate changes, 118–119, 120 Export-processing zones, 14 securities markets, 122–126 Exports, 7, 9, 19, 58, 479 bond market, 125–126 corporate bonds, 126, 127 financial bonds, 126 F investment management, 124–125 trading characteristics of A and B Ferrous metallurgy industry, 474 shares, 124 Fidelity China Region, 353–354 treasury bonds, 125–126 Filter trading rule, 305–306 First Automotive Works Corp., 55, 58 Financial bonds, 126, 204–205 Fixed-income securities underwriting, Financial market reforms, 13, 134–135 201–226 Financial services. See also Banking bond market reforms, 207–208 markets; Insurance; Securities ease rules on bond issuance, 207–208 competitive advantages of foreign firms, Hong Kong Closer Economic 73–74 Partnership Agreement, 208 entry strategies, 73 market-based interest rate reform, 207 investment opportunities, 273 funding and hedging, 209–210 markets overview, 5 currency swaps, 210 prohibited industries, 486 interest rate swap, 209 restricted industries, 485 repurchase agreement, 209–210 WTO commitments, 27–30 interbank markets, 208–209 banking, 28 bond transactions in the interbank implications for the financial industry, bond market, 208 29–30 service providers, 209 insurance, 28–29 municipal securities market, 219–222 securities, 29 required disclosure, 220–221, 221–222 Financial system, 115–135 underwriting process, 220–221 banking markets, 119–122 overview, 201–207 Big Four, 120 bonds issued by securities companies, entry by foreign financial institutions, 205–206 122 clearance and settlement, 207 546 INDEX

Fixed-income securities underwriting sanctions against bribery, 388–389 (continued) civil, 388 convertible bonds, 205 criminal, 388 corporate bonds, 205 other governmental action, 389 credit rating agencies, 206–207 private cause of action, 389 exchange trading of bonds, 203 Foreign direct investments, 8, 52–53, 55 financial bonds, 204–205 Foreign exchange, 132–133, 135, 166 interbank market, 202 Foreign exchange reserves, 11–13 listing of corporate bonds, 206 Foreign invested enterprise (FIE), 141 trading system, 202–203 Foreign-invested joint stock limited Treasury bonds, 204 company (FISC), 163 U.S. corporate debt markets, 222–226 Foreign investments: private placements, 226 automobile market, 56 risk management, 225–226 business and , 93–95 shelf registration (Rule 415), 224–225 investment areas, 93–94 underwriting spreads, 225 process of establishing operations in U.S. Treasury securities market, China, 94–95 210–219 in Chinese banks, 33 coupon rolls, 217 forms of, 54–55 coupon stripping, 211 in medicine, 64, 67 dealer trading, 218–219 Form F-1, 348 market quotations, 212–213 Form F-6, 347, 348 trading and clearing of Treasury Fortis, 73 securities, 217–218 Forwards, 233–235 Treasury inflation-indexed securities, Franklin Templeton, 73 211–212 Freight forwarding, 20 Treasury issuing process and auctions, Front-end load, 259 213–217 Front running, 282 WTO membership implications, 30 Full replication strategy for index funds, Flight to liquidity, 212 365 Flight to quality, 212 , 300, 324, Floaters, 247–248 325–326 Floating risk, 198 Fund management business. See Asset Floor brokers, 283 management business Foreign Corrupt Practices Act: Antibribery Futures, 235–236, 290 Provisions, 90, 383–389 antibribery provisions, 385–387 basic prohibition, 385–386 G third-party payments, 386–387 background, 383–384 Gartmore China Opportunities, 354 enforcement, 384 GDP forecasts, 326 guidance from the government, 389 Geely Motors, 58 permissible payments and affirmative General Agreement on Service Trade, 46 defenses, 387–388 General Agreement on Tariff and Trade affirmative defenses, 388 (GATT), 16–17 facilitating payments for routine General Motors, 56, 58 governmental actions, 387 General obligation bonds (GOs), 219 INDEX 547

General partners (GPs), 262–263 valuation of Internet or high-growth General-purpose money market funds, stocks, 295, 298–300 367 versus , 294–295, Gift giving, 76, 80 313–318, 325 Gifting phase (investor life cycle), 319 Growth stocks, 295, 296–298 GlaxoSmithKline, 67 Guangdong business culture, 82 Global depositary receipts (GDRs), 193, Guangdong Development Bank, 121, 348 122, 273 Global funds, 367 Guangdong International Trust and Goldman Sachs, 38–39, 40 Investment Corporation, 121 Goldman Sachs Gao Hua Securities, Guangdong Province special economic 38–39 zones, 14–15 funds, 365 Guanxi, 83–85 Government securities money market funds, 367 GovPX, 219 H Gross spread, 225 Growth and income funds, 364 Head and shoulder (HS), 309 Growth funds, 364 Health care products and services, 274 Growth investing, 294–312 Hedge funds, 254, 262–266 growth stocks, 295, 296–298 High-grade bond funds, 365 investing styles, 281 High-growth stocks, 295, 298–300 , 303–312 High-tech industrial development zones, 14 breadth of market, 308 High-tech sector, 5 directional movement indicator, 306 High- bonds, 224 Elliot waves, 309, 310 High-yield corporate bond funds, 365 exponential moving average, Holding companies, 55, 141, 485 304–305 Holiday periods, 80, 81 filter trading rule, 305–306 Hong Kong Closer Economic Partnership head and shoulder, 309 Agreement (CEPA), 107–111 investment advisory opinions, bond market reforms, 208 311–312 mergers and acquisitions, 163 and rate of change, rules of origin, 107–108 308–309 setting up in Hong Kong, 110–111 moving average, 304 trade and investment facilitation, 109 moving average convergence trade in goods, 107–108 divergence, 305 trade in services, 108–109 mutual fund cash ratio, 309–310 and WTO, 109–111 odd-lot theory, 311 Hong Kong Exchange, 189–190 options ratio, 311 Hong Kong Monetary Authority, 208 index, 307 Horizontal Commitments, 59–60 interest ratio, 310–311 Hostile takeover, 161 short sales by specialist, 310 Housing bonds, 220 stochastic oscillator, 307–308 HSBC, 32, 34, 122 trading techniques, 300–302 H shares, 54, 123 convertible arbitrage, 302 Hua An Fund Management, 251 market making and day trading, 301 Hybrid REITs, 267 548 INDEX

I foreign insurers in China, 130–131 Impact cost, 286 market potential for foreign insurers, Implementation shortfall, 285–288 128–129 Importing, 9–10, 19, 87 overview, 116 Index-Amortizing Notes (IANs), 248 property and casualty, 28, 29 Index funds, 365–366 regulation, 99–100 Indirect acquisition, 164 WTO commitments, 20, 21, 26, Industrial and Commercial Bank of China 28–29, 131–132 (ICBC): WTO membership, 30, 40, 44–48 banking industry reforms, 121–122 Insurance Law of the People’s Republic of banking reforms, 31, 32 China, 99–100, 446–470 foreign investment in, 33, 34, 39 Chapter I: General Provisions, 99, overview, 37–38, 115, 120 446–447 underwriting stocks, 179 Chapter II: Insurance Contract, Industrial revenue bonds, 220 99–100, 447–456 Industries: Section I: General Provisions, encouraged, 163, 471–479 447–451 prohibited, 102, 486–487 Section II: Property Insurance restricted, 163, 480–485 Contract, 451–454 Industry analysis, 326–327 Section III: Life Insurance Contract, Industry life cycle model, 327 454–456 Informational efficiency, 300–301 Chapter III: Insurance Company, 100, Information technology network, 52 456–460 Information traders, 287 Chapter IV: Insurance Operational ING Greater China, 354 Rules, 100, 460–462 Initial public offerings (IPOs), 142–143, Chapter V: Supervision and 179–181, 182. See also Stock Administration of the Insurance underwriting Business, 100, 462–465 Insider trading, 301 Chapter VI: Insurance Agents and Insurance: Insurance Brokers, 100, 465–466 market opening, 40, 44–48 Chapter VII: Legal Liability, 100, application qualification of insurance 466–470 brokerage companies, 46 Chapter VIII: Supplementary Provisions, business license, 45 100, 470 business scope, 44–45 Intellectual property rights, 20, 25, 68, form of the businesses, 40, 44 76–78 general insurance policy brokerage Interbank bond market, 125, 202, service, 45 208–209 geographical limitations, 44 Interest rate: large-scale commercial insurance, 45 changes, 118–119, 120 legal insurance scope, 45 forecasts, 326 opportunities in life insurance, 46–47 market-based reform, 207 opportunities in nonlife insurance, parity, 278 47–48 swaps, 209, 236–237 markets, 126, 128–132 Interim Rules on Derivative Business of brief history, 129–130 Financial Institutions, 227 changes under WTO, 131–132 Internal Revenue Code of 1986, 363 INDEX 549

International Finance Corporation (IFC), education, 273–274 32, 122 energy, 274–275 International funds, 366–367 environmental technologies, 274 International trade, 7, 9–11 financial services, 273 Internet infrastructure, 273 food packaging equipment, 274 Internet stocks, 295, 298–300 health care products and services, Internet trading, 291–292 274 Inverse floaters, 248 machine tools, 276 Inverse head and shoulder, 309 plastic materials and resins, 275 Investing styles, 281–282 power generation, 275 Investment Advisers Act (1940), 362 retail, 275–276 Investment Advisers Supervision security and fire prevention, 276 Coordination Act (1997), 362 travel and tourism, 276–277 Investment advisory opinions, 311–312 trading and trading costs, 285–287 Investment Company Act (1940), 362, direct costs, 286 378 hidden costs, 286–287 Investment Fund Law, 251 trading mechanics, 282–285 Investment management, 124–125 brokers, 283 Investment opportunities, 271–293 dealers, 283 allocation to Chinese assets, 277–282 transactions, 285 dynamic asset allocation and portfolio specialists versus market makers, 282 insurance, 280–281 types of accounts, 283–284 emerging markets, 279 types of orders, 284–285 investing styles, 281–282 Investment policy statement (IPS), 314, strategic and tactical asset allocation, 316–319 279–280 Investment zones, 102 brokerage services, 291–293 Investor behavior, 318–320 after hours trading, 293 Inward remittance, 166 electronic communications networks, IPOs. See Initial public offerings (IPOs) 291–292 iShares, 370 operating the trading desk, 292 iShares FTSE/Xinhua 25 Index, 380 execution techniques, 287–290 iShares MSCI Hong Kong Index, 381 portfolio trading, 288–289 iShares MSCI Singapore Index, 381 process begins, 289 iShares MSCI Taiwan, 381–382 single-stock trading, 288 strategies for international trading, 289 J trade analysis, 290 transition trading, 290 JHancock Greater China Opp, 354 using futures, 290 Joint ventures: overview, 271–277 automakers, 57 aerospace and aircraft, 271–272 contractual, 104, 144, 492–496 agricultural chemicals, 272 cooperative, 54, 162 architecture construction engineering, equity, 103–104, 488–491 272 establishing operations, 94 automotive, 277 exit strategies, 144–146 computers and telecommunications, Hong Kong, 111 273 mergers and acquisitions, 162 550 INDEX

Joint ventures (continued) Lifan, 58 mutual funds, 125 Life insurance, 28, 29, 46–47, 116, termination of agreement, 145 454–456 JPMorgan, 244–245 Light industry, 472, 479, 481, 486 Junk bonds, 224 Limited and special tax bonds, 220 Limited partners (LPs), 262–263 Limit orders, 284, 375 L Lipitor, 68 Liquidation analysis, 176 Law, business and financial, 93–100 Liquidity, 212, 316, 317, 345–346, 377 banking, 95–96 List of Investment Projects to be foreign investments in China, Confirmed by the Government, 165 93–95 Load funds, 259, 350–351 investment areas, 93–94 , 196 process of establishing operations in Term Capital Management, 264, 266 China, 94–95 L shares, 54, 123 insurance regulation, 99–100 securities regulations, 96–99 Law of the People’s Republic of China on M Banking Regulation and Supervision, 95–96, 390–399 Machinery industry, 475–476, 480 Chapter I: General Provisions, 95, Machine tools, 276 390–391 Management fees, 151, 258–259, 352 Chapter II: The Banking Regulatory Margin accounts, 284 Authority, 96, 391–392 Margin transactions, 285 Chapter III: Regulatory and Supervisory Market-based interest rate reform, 207 Responsibilities, 96, 392–394 Market efficiency hypothesis, 300–301 Chapter IV: Supervisory Methods and Marketing risk, 198 Procedures, 96, 394–396 Market making, 282, 301 Chapter V: Legal Liability, 96, 397–399 Market orders, 284 Chapter VI: Supplementary Provisions, , 325–326 96, 399 Matthews China, 354 Law of the People’s Republic of China on Mechanical industry, 482–483 the People’s Bank of China, 117 Medical equipment industry, 478, 481, Law on Chinese-Foreign Contractual Joint 484 Ventures, 492–496 Medicine and pharmaceutical industry, Law on Chinese-Foreign Equity Joint 63–68 Ventures, 488–491 encouraged industries, 478 Leading economic indicators, 326 entry by foreign firms, 67–68 Legal fees, 199 foreign investment in medicine, 64, 67 Lehman 5-4-3-2-1 formula, 172–173 prohibited industries, 486 Letter of intent (LOI), 166–167 restricted industries, 480, 484 Leveraged buyout analysis, 175 WTO commitments, 64 Leveraged buyout funds, 253 Medium-term notes (MTNs), 223 Leveraged buyouts (LBOs), 157–159 Memorandum of understanding (MOU), Leveraged recapitalization method, 175 166–167 Licenses, 29, 45, 87 Mental accounting, 320 INDEX 551

Merger by absorption, 164 Monetary Policy Committee (MPC), 118 Merger by new establishment, 164–165 Money market funds, 367 Mergers and acquisitions, 160–178 Moral obligation bonds, 220 acquisition motivations, 169–171 Morgan Stanley, 38, 40, 290, 379–380 buyer’s motivations, 169–170 Morgan Stanley China A Share Fund, 380 personal issues, 170–171 Morningstar, 349 seller’s motivations, 170 Mortgage-backed bond funds, 365 takeover defenses, 171 Mortgage lending, 61 China presence, 162–163 Mortgage REITs, 267 Hong Kong Closer Economic Mortgage swaps, 237 Partnership Agreement (CEPA), 163 Most favored nation nondiscrimination, 19 investment banking fees and valuation, Moving average convergence divergence 172–177 (MACD), 305 financing, 176–177 Moving average (MA), 304 valuation and financing, 173–176 Multiplier of method, merger and acquisition agreement, 176 166–169 Municipal bond funds, 365 closing, 168 Municipal notes, 220 due diligence, 167 Municipal securities market, 219–222 postmerger integration, 168–169 Mutual fund cash ratio, 309–310 representation and warranties, 168 Mutual funds, 349–367. See also Asset overview, 160–162 management business caution, 162 actively managed, 363 hostile takeover, 161 basic structure, 361 outbound M&A, 161 benefits, 358–359 regulations and foreign exchange control, Chinese mutual funds, 349–356 165–166 development of China fund industry, foreign exchange, 166 251 new registration system, 165–166 exchange-traded funds, 356 risk arbitrage, 177–178 fund categories and regulations, sector restrictions, 163 251–252 strategic planning and intermediary, mutual fund prospectus, 349–352 172 risks, 352, 355 types of transactions, 163–165 sample mutual funds, 352, 353–355 Mergers and acquisitions multiples closed-end, 250, 253, 369, 371 technique, 175 drawbacks, 359–360 Merrill Lynch, 39, 40, 125 versus exchange-traded funds, 369, 371, Mining industry, 486 372, 373–375 Ministry of Commerce, 165–166 expense ratios, 373 Ministry of Communications, 103 fees and expenses, 350–352 Ministry of Foreign Trade and Commerce, growth of mutual funds in U.S., 102 356–358 Misappropriation, 90 implications of WTO membership, 30 Momentum and rate of change (RoC), joint ventures, 125 308–309 open-end, 250, 256–261, 369, 371, 373 Momentum investors, 282 opening of, 40 Monetary policy, 117–118 opportunities in, 53 552 INDEX

Mutual funds (continued) Nokia, 161 passively managed, 259–260, 363 Noncompetitive bids, 213, 214 performance table, 350 Non-ferrous metallurgy industry, 474, prospectus, 349–352 482 regulation, 361–363 N shares, 54, 123 selection and asset allocation, 356–358 types, 257, 363–367 O aggressive growth funds, 363 asset allocation funds, 366 Oberweis China Opportunities, 354 balanced funds, 364 Odd-lot theory, 311 bond funds, 364–365 Offshore holding companies, 141 equity income funds, 364 Oil, demand for, 9, 274, 275 global funds, 367 Oil swaps, 239 growth and income funds, 364 Old Mutual Clay Finlay China, 354–355 growth funds, 364 Olympics (Beijing, 2008), 21–23, 91–92, index funds, 365–366 272 international funds, 366–367 On balance volume (OBV), 308 money market funds, 367 Online trading, 291–292 sector funds, 366 Open coastal cities, 14 socially responsible funds, 366 Open-end funds, 250, 256–261, 369, 371, 373 Opportunities and challenges, 50–78 N automobile market, 55–58 automobile financing, 58 Nanjing anticorruption measures, 92 exports to U.S., 58 -100 Index Tracking Stock, foreign investment, 56 370 future outlook, 56–58 National Association of Securities Dealers WTO commitments, 55–56 Automated Quotations (NASDAQ), challenges, 74–78 195, 292, 336 corruption, 74–75 National Association of Securities Dealers cultural differences, 75–76 (NASD), 284, 292, 350, 363 intellectual property rights, 76–78 National Development and Reform recruiting for talent, 78 Commission (NDRC), 165 financial services, 73–74 Nationalization and expropriation risks, competitive advantages of foreign 355 firms, 73–74 Nationally Recognized Municipal entry strategies, 73 Securities Information Repository forms of foreign investments, 54–55 (NRMSIR), 222 medicine and pharmaceutical, 63–68 National People’s Congress (NPC), 86 entry by foreign firms, 67–68 Natural gas, demand for, 274–275 foreign investment in medicine, 64, (NAV), 258 67 Newly emerged industry, 479 WTO commitments, 64 (NYSE), 195, new environment, 50–52 284, 335, 342–343 changing business environment, 51–52 Ningbo business culture, 83 domestic market, 51 INDEX 553

opportunities for investing, 52–54 Portfolio risk and return, 321–323 opportunities for multinational Portfolio trading, 288–289 corporations, 53 Power industry, 275, 473, 482, 486 stock market opportunities, 53–54 PowerShares, 370 retail and consumer market, 59–63 PowerShares Golden Dragon Halter USX consumer spending, 60–61 China, 380–381 opportunities for foreign firms, 62–63 Price to book value valuation method, 332 WTO commitments in retail, 59–60 Price to cash flow valuation method, 332 Opportunity cost, 287 Price-to-earnings ratio, 176 Options ratio, 311 Price to earnings valuation method, 332 Option valuation method, 147 Price-to-sales ratio, 175 Orange County, 249 Price to sales valuation method, 332 Outward remittance, 166 Pricing risk, 198 Overnight repos, 229 Prime brokerage, 264 Over-the-counter bond market, 125 Principle-agent theory of corruption, 88 Private equity fund management and investing: P buyout funds, 157–159 leveraged buyouts and economic Passively managed mutual funds, 259–260, benefits, 158–159 363 U.S. leveraged buyout firms, 158 Pearl River Delta region, 110 investment strategies People’s Bank of China (PBC): investing evaluations, 152 bond market, 125, 208, 228 overview, 136–140 financial system, 117–119, 120 private equity investors in China, 138, interbank market, 202, 209 139–140 interest rate, 118–119, 120, 209 success factors, 137–138 law on, 117 U.S. investment banks, 138, 140 market-based interest rate reform, 207 practical considerations, 140–146 overview, 115 due diligence, 141–142 qualified foreign institutional investors, exit strategies, 142–143 254 offshore holding company, 141 representative offices, 102 State Administration of Foreign People’s Construction Bank of China Exchange (SAFE) Circular 75, (PCBC), 115 141 People’s Insurance Company of China strategies for exiting distressed (PICC), 29, 30, 47, 116, 129 investments, 143–146 Petroleum, petrochemical and chemical private equity fund of funds, 146 industry, 474–475, 480, 482–483, valuation methods, 146–148 486 venture capital, 148–151 Pfizer, 68 characteristics of VC investing, Pharmaceutical industry, 63–68, 478 149–150 Poison pill, 171 life cycle, 149 Policy banks, 121 management fee, 151 Political structure, 85–86 other issues, 151 Population projections, 61–62 profit and loss allocations, 150–151 Porter, Michael, 326–327, 328 setting up operations, 150 554 INDEX

Private equity fund management and Purchase fees, 351 investing (continued) Puttable bonds, 224 venture capital investment strategies, 151–157 exit strategies, 156–157 Q growth stage transactions, 154–155 investment securities, 156 Qualified foreign institutional investors risk factors, 152–153 (QFIIs): special-purpose investing, 155–156 asset management business, 254–256 start-up phase transactions, 153–154 custodian banks, 255 VC investing in a buyout, 155 investment management, 125 venture capital transactions, 153–157 list, 43 Private placements, 226 mutual funds, 352, 355 Privilege seeking, 90 securities, 40 Processing and assembly agreements, 54 underwriting stocks, 190–191 Profiteering, illegal, 90 Prohibited industries, 485–487 agriculture related, 485 R broadcasting and film, 487 journalism, 487 Range notes, 249 light, 486 Real estate industry, 485 medicine, 486 Real estate investment trusts (REITs), mining, 486 254, 266–267 miscellaneous, 487 Real estate swaps, 239–240 overview, 102 Recruiting for talent, 78 petroleum, petrochemical and chemical, Redemption fees, 350 486 Red envelope, 74 power and urban public facility, 486 Regulation S, 348 trade and finance, 486 Regulations for Guiding the Direction transportation, post and of Foreign Investment, 163 telecommunications service, 486 Regulations for the Special Economy weapons manufacturing, 487 Zone of Guangdong Province, 15 Property and casualty insurance, 28, 29 Relative strength index (RSI), 307 Prospectuses, 349–352, 369 Relative valuation, 331–333 Provisional Administrative Rules Renminbi (RMB), 116–117, 132–133 Governing Derivatives Activities of Rent appropriation by the ruler theory, Financial Institutions, 497–504 87, 88–89 Chapter I: General Provisions, 497–498 Repos. See Repurchase agreements Chapter II: Regulation of Market Entry, Representative offices, 55, 102–103, 498–501 111 Chapter III: Risk Management, 501–503 Repurchase agreements, 228–232 Chapter IV: Legal Liability, 504 funding and hedging, 209–210 Chapter V: Supplemental Provisions, 504 interbank bond market, 202, 208, Provisional Measures on Administration of 209–210 Domestic Securities Investment of mechanics and market practices, Qualified Foreign Institutional 230–231 Investors, 254 overnight repos, 229 INDEX 555

reverse, 216 Rule 144A, 193, 226, 343 specials, 232 Rule 415, 224–225 term, 229 Rules for Implementing the Regulations triparty, 229–230 Governing Foreign Financial Reserve requirements, 118–119, 120 Institutions in the People’s Republic of Restricted industries, 479–485 China, 273 agriculture related, 481 building materials and equipment, 483 communication, transportation, post and S telecommunications, 482 electronic, 480, 483 SAFE (State Administration of Foreign finance and relevant trades, 485 Exchange), 117, 132, 141, 166, 256 light, 479, 481 Sales loads, 259, 350–351 machinery, 480 Salomon Brothers, 216–217 mechanical, 482–483 Sampling approach to index funds, medical apparatus and instruments, 481, 365–366 484 Sarbanes-Oxley Act (2002), 194 medicine, 480, 484 Savings, 11–13 mergers and acquisitions, 163 SEC. See Securities and Exchange miscellaneous, 485 Commission (SEC) non-ferrous metal, 482 Second-tier commercial banks, 121 petroleum, petrochemical and chemical, Sector funds, 366 480, 482 Sector rotation, 325 power, 482 Securities Act (1933), 362–363 shipping, 484 Securities and Exchange Commission textile, 480, 481 (SEC): trade, tourism, real estate and service, American depositary receipts, 340, 484–485 347–348 transportation service, 481 commissions paid to brokers, 291 Retail and consumer market, 21, 59–63, ETFs, 371, 378 275–276 municipal securities, 221–222 Revenue anticipation notes, 220 mutual fund registrations, 362–363 Revenue bonds, 219–220 mutual fund sales loads, 350 Reverse repurchase transaction, 216 underwriting stocks, 193–194, 195–196, Risk: 200 Chinese mutual funds, 352, 355 Securities and Investment Fund Law, 252 individual versus institutional investors, Securities Exchange Act (1934), 363 318 Securities investment funds (SIFs). See investment objectives, 316 Mutual funds investor behavior, 320 Securities Investor Protection Fund (SIPF), U.S. corporate debt markets, 225–226 181 venture capital, 152–153 Securities Law of the People’s Republic of Risk arbitrage, 177–178 China, 96–99, 400–445 Risk management. See Derivatives markets Chapter I: General Provisions, 96, and risk management 400–401 Rule 12g3-2(b), 340, 347–348 Chapter II: Issuance of Securities, 96–97, Rule 15c2-12, 221–222 401–407 556 INDEX

Securities Law of the People’s Republic of listing fee schedule, 189 China (continued) market indexes on, 124 Chapter III: Transaction of Securities, 97, overview, 116, 181 407–408 process and listing requirements, Chapter IV: Listing of Securities, 97–98, 187–189 408–420 Shelf registration, 224–225 Section I: On-going Information Shenzhen Stock Exchange (SZSE): Disclosure, 412–414 bonds, 203, 205 Section II: Prohibited Trading Acts, China stock market, 189 414–417 overview, 116, 181 Section III: Acquisition of Listed small growth companies, 295, Companies, 417–420 296–298 Chapter V: Stock Exchanges, 98, Short interest ratio (SIR), 310–311 420–422 Short sales by specialist, 310 Chapter VI: Securities Companies, 98, , 216–217 422–428 Sichuan business culture, 82–83 Chapter VII: Securities Registration and Single-price auction, 214, 216 Clearing Institutions, 98–99, Single-stock trading, 288 428–431 SME Board, 295, 296–298 Chapter VIII: Securities Trading Service SmithKline, 67 Institutions, 99, 431–432 Socially responsible funds, 366 Chapter IX: Securities Industry Soft dollars, 291 Association, 99, 432–433 SPDRs (Spiders), 370, 372 Chapter X: Securities Regulatory Bodies, Special economic zones (SEZs), 99, 433–435 13–15 Chapter XI: Legal Liabilities, 99, Special purchase vehicle (SPV), 242 435–445 Spending phase (investor life cycle), Chapter XII: Supplementary Articles, 99, 319 445 Sponsored ADRs, 192–193, 340–343, Securities markets, 122–126 344 Securities regulations, 96–99 Spot market trading, 233 Security and fire prevention, 276 Spot transaction, 208 , 330–331 SSE. See Shanghai Stock Exchange (SSE) Semi-strong form efficiency, 301 Standard Chartered, 34 Separate Trading of Registered Interest and State Administration for Industry and Principal of Securities (STRIPS), 211, Commerce, 103, 107 212 State Administration of Foreign Exchange Service industry, 20, 56, 108–109, 479, (SAFE), 117, 132, 141, 166, 256 485 State Assets Supervision and Shanghai Automotive Industry Administration Commission (SASAC), Corporation, 55, 58, 277 160–161 Shanghai business culture, 81–82 State capture corruption, 89 Shanghai Pudong International Airport, State-owned commercial banks (SOCBs), 272 28, 31 Shanghai Pudong New Area, 14 State-owned enterprises (SOEs), 28, 31, Shanghai Stock Exchange (SSE): 160–161 bonds, 203, 205 Step-ups, 248 high dividend stocks, 313–314, 315 Stock trading styles, 324–328 INDEX 557

Stock underwriting, 179–200 T China stock market, 181–190 Hong Kong Exchange, 189–190 Tactical asset allocation, 280 process and listing requirements, Tail of the auction, 214–215 184–189 Taiwan, 80 rationale for going public, 183–184 Takeover defenses, 171 Shenzhen Stock Exchange, 189 Target stock price history analysis, 175 unique features of Chinese initial Tariff reforms, 24, 26, 55 public offerings, 182 Taxes: compensation, 198 ADR price calculations, 346–347 costs of going public, 198–200 constraints, 316–317 direct costs, 199 ETFs, 371, 374 hidden and future costs, 199–200 individual versus institutional investors, underpricing, 199 318 depositary receipts, 191–193 local, 346–347 global depositary receipts, 193 mutual funds, 359 issuance and cancellation, 192 Tax-exempt money market funds, 367 types of depositary receipts facilities, Technical analysis, 303–312 192–193 breadth of market, 308 listing in the United States and London, directional movement indicator, 306 193–196 Elliot waves, 309, 310 aftermarket trading and research, exponential moving average, 304–305 195–196 filter trading rule, 305–306 exchange listing requirements, 195 versus fundamental analysis, 324 London Stock Exchange, 196 head and shoulder, 309 Sarbanes-Oxley Act of 2002, 194 investment advisory opinions, 311–312 market overview, 179–181 momentum and rate of change, 308–309 IPO trends in greater China, moving average, 304 179–181 moving average convergence divergence, pricing, 196–197 305 qualified foreign institutional investors, mutual fund cash ratio, 309–310 190–191 odd-lot theory, 311 underwriting risks, 197–198 options ratio, 311 Stop orders, 284–285 relative strength index, 307 Strategic asset allocation, 260, 279–280 short interest ratio, 310–311 streetTracks, 370 short sales by specialist, 310 Strong form efficiency, 301 stochastic oscillator, 307–308 Structured notes, 247–249 Telecommunications, 68–72 Substitution order, 289 basic services, 70–71 Supplemental redemption amount, current market environment, 69 379–380 foreign entry, 72 Swaps contracts, 236–240 investing in, 273 commodity price swaps, 238–239 prohibited industries, 486 currency swaps, 237–238 restricted industries, 482 equity swaps, 239 telecom operators, 71–72 interest rate swaps, 236–237 value-added services, 71 real estate swaps, 239–240 WTO commitments, 21, 26, 69–70 Synergies, 169 Temasek, 33 558 INDEX

Templeton China World A, 355 Triparty repos, 229–230 Term repos, 229 Trust and investment corporations (TICs), Textile industry, 26, 472, 480, 481 116, 121 Third-party payments, 386–387 12b-1 fees, 258, 352 Time horizon constraints, 316, 317 Timing cost, 286–287 Top-down investing, 325 U Total return swaps, 246 Tracking errors, 368–369, 378–379 Underwriting. See Fixed-income securities Trade analysis, 290 underwriting; Stock underwriting Trademark law, 77 Underwriting spread, 198, 199, 225 Trade-Related Aspects of Intellectual Unilever, 52 Property Rights (TRIPS) Agreement, Unit investment trusts (UITs), 253, 20, 25 378–379 Trade zones, 102 Unsponsored ADRs, 192, 339–340, 344 Trading and trading costs, 285–287 Upstairs block market, 288 Trading mechanics, 282–285 U.S. corporate debt markets, 222–226 brokers, 283 U.S. Global Investors China Reg Opp, dealers, 283 355 margin transactions, 285 U.S. investment banks, 138, 140 specialists versus market makers, 282 U.S. Treasury securities market, types of accounts, 283–284 210–219 types of orders, 284–285 coupon roles, 217 Trading rights and distribution services, coupon stripping, 211 19 dealer trading, 218–219 Transfer agents, 361 market quotations, 212–213 Transition trading, 290 trading and clearing of Treasury Transportation industry, 52, 472–473, securities, 217–218 481, 482, 486 Treasury inflation-indexed securities, Travel and tourism industry, 276–277, 211–212 485 Treasury issuing process and auctions, Treasury Automated Auction Processing 213–217 System (TAAPS), 213–214 auction process, 213–214 Treasury bills, 210, 212, 217–218 example of a Treasury auction, Treasury bonds, 125–126, 204, 210–211, 214–215 212, 218 short squeeze, 216–217 Treasury Inflation Protection Securities when-issued trading and dealer bidding (TIPS), 211–212 strategies, 215–216 Treasury issuing process and auctions, 213–217 auction process, 213–214 V example of a Treasury auction, 214–215 Valuation: short squeeze, 216–217 Internet or high-growth stocks, 295, when-issued trading and dealer bidding 298–300 strategies, 215–216 mergers and acquisitions, 173–176 Treasury notes, 210, 212, 218 versus pricing, 196 Treasury zeros, 211, 212 private equity, 146–148 INDEX 559

techniques, 328–333 other issues, 151 capital asset pricing model, profit and loss allocations, 150–151 330–331 setting up operations, 150 discounted cash flow, 328–330 Venture capital-backed companies, 140, relative valuation, 331–333 144 Value-added content rule, 107 Venture capital-backed IPOs, 143 Value investing, 313–333 Venture capital funds, 137–138, 139, costs, 287 253 versus growth investing, 294–295, Venture capital valuation method, 313–318, 325 147–148 individual investors, 318–320 VIPERs, 370–371 investor behavior, 318–320 Visionary Vehicles LLC, 58 investing styles, 281–282 Volkswagen (VW), 52–53, 56, 58 investment considerations, 313–314, 316–318 constraints, 316–318 W investment objectives, 314, 316 investment policy and guidelines, Waiting risk, 198 314 Wal-Mart, 62–63 stock trading styles, 324–328 Weak form efficiency, 300–301 economic analysis, 326 Weapons manufacturing, 487 fundamental analysis, 325–326 Weighted average of expected returns, generic competitive strategies, 321–322 327–328 Weighted moving average, 304 industry analysis, 326–327 Wenzhou business culture, 83 valuation techniques, 328–333 When-issued trading, 215–216 capital asset pricing model, 330–331 White knight, 171 discounted cash flow, 328–330 Wholly foreign-owned enterprises relative valuation, 331–333 (WFOEs): value and growth in a portfolio, application procedures, 106–107 321–324 establishing operations, 94–95 portfolio risk and return, 321–323 forms of foreign investments, 54–55 Vanguard, 370–371 mergers and acquisitions, 162–163 Venture capital (VC), 148–157 restricted industries, 485 investment characteristics, 149–150 setting up, 104–106 investment strategies, 151–157 tax benefits, 141 exit strategies, 156–157 WTO commitments, 20–21 growth stage transactions, 154–155 Working Party on China’s Accession, 25, investment securities, 156 26 risk factors, 152–153 World Trade Organization (WTO) special-purpose investing, 155–156 membership, 15–21, 24–48 start-up phase transactions, commitments in financial services, 153–154 27–30 VC investing in a buyout, 155 banking, 28 venture capital transactions, implications for the financial industry, 153–157 29–30 life cycle, 149 insurance, 28–29 management fee, 151 securities, 29 560 INDEX

World Trade Organization (WTO) process leading to membership, membership (continued) 16–19 Hong Kong Closer Economic regulatory changes, 19–20 Partnership Agreement (CEPA), special economic zones, 15 109–111 status of commitments, 20–21 market opening in banking, 30–38 trade commitments, 24–27 banking market reforms in 2005 and benefits of China’s accession, 26–27 2006, 31–32 commitments in goods and services, business opportunities for foreign 25–26 financial institutions, 34–38 general commitments, 25 entry by foreign financial institutions, Wrapped accounts, 284 32–34 WTO membership. See World Trade market opening in insurance, 40, 44–48 Organization (WTO) membership application qualification of insurance brokerage companies, 46 business license, 45 X business scope, 44–45 changes in, 131–132 Xiaolingtong, 69 form of the businesses, 40, 44 general insurance policy brokerage service, 45 Y geographical limitations, 44 large-scale commercial insurance, 45 Yield curve anticipation notes, 248–249 legal insurance scope, 45 Yield curve shifts, 326 opportunities in life insurance, 46–47 opportunities in nonlife insurance, 47–48 Z market opening in securities, 38–40, Zhejiang business culture, 83 41–44