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Fixed Income Business

Given the extremely competitive environment in 2015, KGI Securities' Fixed Income Department demonstrated a strong and balanced performance in all business areas. Under the government's deregulation policies, in early 2015, KGI Securities participated in the offshore underwriting USD Bond offering of Bank of China (Hong Kong Branch), which was the first among Taiwan Peers to kick off underwriting business under Offshore Securities Unit (OSU) platform. The Fixed Income Department also devoted itself to international bond origination in 2015 to provide domestic investors with a variety of fixed income products, and acted as a market maker in bond secondary market to boost market liquidity.

In 2015, economic performance was divergent across the globe. In the US, while the job market continued improving and fiscal conditions recovered, the Federal Reserve System (Fed) kept a close eye on the economic conditions of emerging market, Europe and Japan and did not raise the federal fund rate until 4Q15. Europe, where interest rate remained low, and China, which saw domestic market weaken, launched accommodative monetary policies. Overall, the major money and interest rate markets worldwide experienced several trend reversals in 2015, providing trading opportunities. In Taiwan, as economic recovery was fragile due to weakening demand from China, and because of falling international raw material prices since 2H15, the central bank reduced interest rates twice and launched stimulus measures to beef up domestic consumption and investment sentiment. While the overall environment was not encouraging for the fixed-income market, KGI Securities managed to deliver impressive results across various business segments in 2015. KGI Securities was awarded the “Best Debt Capital Market (DCM) House” in Taiwan by FinanceAsia and the “Triple A Country Award Best Bond House – Domestic (International bonds)” by The Asset. It was also named the “Top Bank in the Secondary Market in Asian Local Currency Bonds for Government Bonds” and “Top Banks in the Secondary Market in Asian Local Currency Bonds for Corporate Bonds” in Taiwan by Asset Benchmark Research. In addition, KGI Securities was given the “Best Government Bond Market Maker” in 2015 by Taipei Exchange.

In 2015, KGI Securities ranked second in the local principle guaranteed structured product market, commanding a 23.9% market share. In the domestic and international corporate bonds underwriting business, with a 15.6% market share, KGI Securities ranked first among peers. As far as the Convertible Bond Asset Swap (CBAS) credit business, KGI Securities ranked second, with a 24.4% market share.

KGI Securities has persistently improved its customer service and expanded its client base by providing customized products to satisfy the varied needs of its clients. KGI Securities will continue to cultivate all-around fixed-income talent and aggressively penetrate financial markets via product R&D and innovation. KGI Securities has maintained close cooperation with large domestic enterprises, providing them with daily English commentaries on the Hong Kong, Thailand and Taiwan bond markets, as well as weekly market news on various products. KGI Securities also holds investment seminars and training sessions to supply comprehensive financial market information as soon as it is available. We believe KGI Securities is capable of providing comprehensive financial services and assisting companies in the Greater China region to raise funds in the bond market, given its extensive underwriting experience and CDF's abundant resources.

Going forward, KGI securities will continue to adhere to its sound management principles. We expect it to maintain its leadership position by providing the best investment advice and products to customers and by sticking to its core principles of integrity, professionalism and innovation, which will create the most value for its clients and shareholders.