Xinhua Finance and Milken Institute Launch China Indicators

Xinhua Finance and Milken Institute Launch China Indicators

November 16, 2006

Initial Three Indicators Gauge Pressure on Renminbi, IPO Market Performance and Capital Structure of Chinese Companies

    SHANGHAI, Nov. 16 /Xinhua-PRNewswire/ -- Xinhua Finance
Ltd. (TSE Mothers: 9399 and OTC: XHFNY) and the Milken
Institute has released the first three of eight new
economic indicators tracking China's financial markets. 

    The three indicators, whose launch was announced on
November 15 at the US-China Executive Summit held in New
York, are aimed at providing investors, analysts and
financial professionals with deeper insight into China's
money and capital markets. According to the CEO of Xinhua
Finance, Fredy Bush, they "greatly demystify the
Chinese macro economy by matching the rigor of the Milken
Institute's empirical methodologies with the rigor of
Xinhua Finance-compiled data."

    The first three of the Xinhua Finance/Milken Institute
China Indicators series objectively evaluate three
important facets of China's economy: the currency market,
the equity capital market and the debt capital market. They
are: 

    Renminbi Pressure Indicator (RPI): The monthly RPI
measures the appreciation pressure on the renminbi, mainly
relative to the U.S. dollar, by combining data on exchange
rates, foreign exchange reserves and interest rates. This
indicator shows that upward pressure on China's currency
increased 14.6 percent from July 2004 to July 2005, when
the currency was revalued. In the 12 months since the
revaluation, the pressure has slowed to 9.4 percent.

    Chinese Initial Public Offering Indicator (IPO
Indicator): The monthly IPO Indicator offers a summary of
composition and performance changes in the Chinese IPO
market, as measured by market capitalization. Its release
coincides with resurging interest in Chinese new issuances,
such as last month's record-breaking IPO of Industrial and
Commercial Bank of China in Hong Kong and Shanghai. The
indicator, composed of a monthly average of 102 companies,
shows an 80 percent price appreciation in new issues from
December 1997 to August 2006. 
 
    Market-Adjusted Debt Indicator (MAD Indicator): The
quarterly MAD indicator focuses on China's debt capital
market. It measures the capital structure of Chinese
companies, using a long-term debt-to-equity ratio based on
market value, instead of book value. It shows that, from
2001 to the first quarter of 2006, the amount of market
debt outstanding increased from 6.6 cents to 22.2 cents for
each dollar of equity capital, a 236 percent increase. This
indicator finds that Chinese firms are underleveraged when
compared with their counterparts in developed countries. 

    Ms. Bush said that she is proud of Xinhua Finance and
Milken Institute's unprecedented initiative toward
delivering greater transparency and efficiency to the
Chinese financial market.

    "The indicators contribute more useful,
quantitative ways of looking at China's financial markets.
They advance our organizations' joint mission of
facilitating market growth by laying the groundwork for the
development of robust foreign exchange, corporate bond,
equity and derivatives markets."

    Milken Institute President and CEO Michael L. Klowden
agreed that the indicators are an important new tool to
help understand China's markets.

    "The three indicators will benefit a wide set of
market participants as they can be used as effective tools
to judge and assess market circumstances and movements in
support of investment decision-making," he said.

    Xinhua Finance, China's leading financial information
and media organization, and the Milken Institute, one of
the world's leading economic and financial research think
tanks, agreed in April to create a set of eight new
economic indicators tracking China's markets. The
indicators use Xinhua Finance's extensive local
data-gathering capabilities in the production process and
the Milken Institute's expertise and established
methodologies for capital-market research.  

    The other five indicators to be launched in 2007 are
the Chinese Banking Sector Indicator, the Chinese Mergers
and Acquisitions Indicator, the Chinese Privatization and
Joint Venture Indicator, the Chinese Corporate Governance
Indicator and the Trade Openness Indicator.

    For more information, go to
http://www.xinhuafinance.com/indicators or
http://www.milkeninstitute.org . 

    About Xinhua Finance Limited

    Xinhua Finance Limited is China's unchallenged leader
in financial information and media, and is listed on the
Mothers board of the Tokyo Stock Exchange (symbol: 9399)
(OTC ADRs: XHFNY). Bridging China's financial markets and
the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through four focused and
complementary service lines: Indices, Ratings, Financial
News and Investor Relations. Founded in November 1999, the
Company is headquartered in Shanghai with 20 news bureaus
and offices in 19 locations across Asia, Australia, North
America and Europe. For more information, please visit
http://www.xinhuafinance.com .
 
    About the Milken Institute 

    The Milken Institute is a nonprofit, independent
economic think tank whose mission is to improve the lives
and economic conditions of diverse populations around the
world by helping business and public policy leaders
identify and implement innovative ideas for creating
broad-based prosperity. It is based in Santa Monica, CA.
For more information, please visit
http://www.milkeninstitute.org .

    For more information, please contact:

    Xinhua Finance

    China
     Ms. Joy Tsang
     Tel:   [phone]
     Email: [e-mail]

    Japan
     Mr. Jiong Sun
     Tel:   [phone]
     Email: [e-mail]

    Taylor Rafferty (Media contact for Xinhua Finance)
    Japan 
     Mr. James Hawrylak
     Tel:   [phone]
     Email: [e-mail]

    United States
     Ms. Ishviene Arora
     Tel:   [phone]
     Email: [e-mail]

    Europe
     Mr. John Dudzinsky
     Tel:   [phone]
     Email: [e-mail]

    Milken Institute

     Jennifer Manfre
     Communications Manager
     Tel:   [phone]
     Email: [e-mail]

     Skip Rimer
     Director of Communications
     Tel:   [phone]
     Email: [e-mail]

SOURCE  Xinhua finance; Milken Institute