China’s capital market is in a critical transitional period with its fundamental functions being restored as the state-owned Non-transferable Shares (NTS) reform and the initiatives to restructure and reform domestic securities firms are coming to an end. The year of 2006 is very critical to the development and reform of China's securities market. It is the year for the market to embark on the road to rational exuberance. It also marks the beginning of Haitong Securities’ new 3-year strategy and a “new start” In the past year, Haitong has comprehensively enhanced its competitiveness and pushed forward the sustainable development of all business lines with innovation. Haitong has laid down a solid foundation for “new start” by achieving a critical step forward to be a listed company.

In 2007, Haitong will capitalize on every opportunity to enhance its core competitiveness by accelerating the reform by following a market-oriented approach in line with global best practices. Haitong will expedite the reform to turn itself into a modern full investment banking services firm by reforming the human resources system, consolidating organization structures and reengineering business processes. Haitong will closely follow every innovation in the market to drive the transformation of its business and the establishment of new business models. Haitong will continue its 3-step strategy of “going public, developing a full financial services group and expanding international presence”, Haitong will actively attract both overseas and domestic strategic investors, accelerate the process of public listing and full financial services group setup. Haitong will make every effort to develop itself to a top-tier full investment banking services company in China with increasing presence in the overseas capital markets.

The year of 2006 is very critical for the development and reform of China securities market. It is the year for the market to embark on the road to rational exuberance and the beginning of the “New Start” and 3-year strategy of Haitong Securities.

Confronted with the ever-changing and severe market situations, the management team of Haitong Securities has promptly transformed operation model, adjusted business structure, strengthened risk control and carried out operation and management by focusing on standardization and innovation. The management team of Haitong Securities led the whole staff to rapid development of various businesses and excellent beginning achieved for the “New Start” Strategy by timely grasping favourable market opportunities and making greater effort to expand business. Haitong has also made a critical step forward in going public.

In this year, Haitong has witness rapid and health development of various business through the concerted and relentless efforts of the whole staff. Haitong is active in products and business innovation after having been granted the “innovative Status”. Haitong has launched its first pooled investment product Haitong Steady Growth Pooled Asset Management Plan on 27th, March, 2006 with total sales of RMB 1230.933mn, which took the lead in the sales of all the pooled investment products. Haitong Steady Growth Pooled Asset Management Plan is currently operated well. Haitong investment bank business is taking the far lead in sponsoring the NTS reform in 2006, and has totally finished NTS reforms for 132 companies, ranking No.1 with the market share of 10%. Haitong has also achieve strengthened earning capacity and marketing power of brokerage business, significant profit growth in proprietary trading, ranking one of the top3 local brokers for QFII clients in terms of number of QFII clients and size of committed assets.

In 2007, Haitong will keep on achieving breakthrough in innovation while promoting the culture of compliance and credibility, strengthening business management, enhancing the enforcement of rules, mobilizing various resources and standardizing operations to further improve the assets quality, earnings capacity and risk tolerance. On such basis, Haitong will comprehensively enhance its competitiveness and push forward the sustainable and healthy development of various businesses.