| Trade Date |
12 Jul 2013 |
| Deposit Date |
12 Jul 2013 |
| Fixing Date |
19 Jul 2013 |
| Maturity Date |
19 Jul 2013 |
| Tenor |
1 week (7 days for interest calculation) |
| Deposit Currency |
HKD |
| Alternate Currency |
AUD |
| Principal |
HKD 100,000 |
| Conversion Rate |
AUD/HKD: 7.1000 (as at applicable spot rate) |
| Interest Rate |
32.35% p.a. |
Return against different Fixing Rates
Scenario 1 Best Case Scenario – AUD strengthens against HKD (Fixing Rate > Conversion Rate)
Assuming the Fixing Rate is 7.2123, the repayment currency will be HKD
Principal + Interest: HKD 100,000 x (1 + 32.35% x 7/365) = HKD 100,620.41
Profit# = HKD 620.41
Scenario 2 AUD remains stable against HKD (Fixing Rate = Conversion Rate)
Assuming the Fixing Rate is 7.1000, the repayment currency will be HKD
Principal + Interest: HKD 100,000 x (1 + 32.25% x 7/365) = HKD 100,620.41
Profit# = HKD 620.41
Scenario 3 AUD weakens against HKD (Fixing Rate < Conversion Rate)
Assuming the Fixing Rate is 7.0602, the repayment currency will be AUD
Principal + Interest:
Step 1: HKD 100,000 x (1 + 32.35% x 7/365) = HKD 100,620.41
Step 2: HKD 100,620.41 / 7.1000 = AUD 14,171.89
If convert to HKD at the prevailing exchange rate (AUD / HKD: 7.0602)
AUD 14,171.89 x 7.0602 = HKD 100,056.38
Profit# = HKD 56.38
Scenario 4 AUD weakens further against HKD (Fixing Rate < Conversion Rate)
Assuming the Fixing Rate is 7.0139, the repayment currency will be AUD
Principal + Interest:
Step 1: HKD 100,000 x (1 + 32.35% x 7/365) = HKD 100,620.41
Step 2: HKD 100,620.41 / 7.1000 = AUD 14,171.89
If convert to HKD at the prevailing exchange rate (AUD / HKD: 7.0139)
AUD 14,171.89 x 7.0139 = HKD 99,400.22
Loss# = HKD 599.78
# If the Deposit Currency or the Alternate Currency (as the case may be) is not your home currency, you will be exposed to exchange rate fluctuation such that, when the Deposit Currency or the Alternate Currency (as the case may be) depreciates against your home currency, the loss from depreciation may offset or even exceed the potential profit or may worsen the potential loss as illustrated in the various scenarios above.
Scenario 5 Worst Case Scenario – AUD drops to zero against HKD
In any case of receiving AUD as the repayment currency, if the exchange rate of AUD against HKD drops to zero, then your loss would be the entire investment amount.
Scenario 6 The Bank becomes insolvent or defaults on its obligations
Assuming that the Bank becomes insolvent during the tenor of the Currency Linked Premium Deposit or defaults on its obligations under the Currency Linked Premium Deposit, you can only claim as its unsecured creditor. You may get nothing back and suffer a total loss of your deposit amount.
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Key Risks Warning
The key risks for Currency Linked Premium Deposit are set out below. However, these risks do not represent all possible risks associated with an investment in Currency Linked Premium Deposit. You should obtain any necessary and appropriate professional advice before investing in this product.
Non-Principal Protected Structured Deposit –Currency Linked Premium Deposit is a structured deposit involving derivatives. Currency Linked Premium Deposit is not principal protected. You could lose all or part of your original deposit amount.
Derivative Risk – Currency Linked Premium Deposit is embedded with foreign exchange option(s). Option transactions involve risks, especially when selling an option. Although the premium received from selling an option is fixed, you may sustain a loss well in excess of such premium amount, and your loss could be substantial.
Not a Protected Deposit – Currency Linked Premium Deposit is not equivalent to time deposit and should not be regarded as a substitute for time deposit. Currency Linked Premium Deposit is not a protected deposit and is not protected by the Deposit Protection Scheme in Hong Kong.
Foreign Exchange Risk – The return of Currency Linked Premium Deposit is linked to the exchange rate between the Deposit Currency and the Alternate Currency. Movements in exchange rates can be sudden and drastic, and affected by complex political and economic factors. You will be exposed to a risk of loss arising from exchange rate fluctuations. If the Deposit Currency and/or Alternate Currency is/are not your home currency, and you choose to convert it back to your home currency upon maturity, you may make a gain or loss due to exchange rate fluctuations.
Exchange Control - For currencies subject to exchange controls imposed by the relevant governments, such as renminbi (RMB), the exchange rates may be easily affected by change in government policies. Such currencies may have different exchange rates quoted in different markets. For example, exchange rates of RMB are quoted in onshore and offshore markets; the onshore rate of RMB is being referred as “CNY” and the offshore rate (i.e. when traded in Hong Kong) is being referred as “CNH”. Although CNY and CNH represent the same currency, they do not necessarily have the same exchange rate and may not move in the same direction.
Limited Potential Return – Investing in Currency Linked Premium Deposit is not the same as investing in the Alternate Currency directly. Even if your view of the market movement of the Alternate Currency is correct, the maximum potential return is limited to the total interest amount for the Currency Linked Premium Deposit.
Credit Risk – Currency Linked Premium Deposit is not supported by any collateral or guarantee. Currency Linked Premium Deposit is subject to the creditworthiness of Dah Sing Bank ("Bank"). If the Bank becomes insolvent or goes into liquidation or defaults on its obligations under the Currency Linked Premium Deposit while your Currency Linked Premium Deposit is still outstanding, you will rank as an unsecured creditor of the Bank and could, in the worst case, lose your entire deposit amount irrespective of the terms of the Currency Linked Premium Deposit.
Liquidity Risk – Currency Linked Premium Deposit should be held until maturity. Currency Linked Premium Deposit is not listed on any exchange and is not transferable. Any termination, cancellation or withdrawal prior to maturity is subject to the consent of the Bank. You may incur significant costs or losses as a result of early termination, cancellation or withdrawal.
Risks of early termination by the Bank – The Bank has the right (but not the obligation) to terminate this product early upon occurrence of certain events. If this product is terminated by the Bank early, you may suffer a substantial loss under this product.
| This is a structured product involving derivatives. The investment decision is yours but you should not invest in the Currency Linked Premium Deposit unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives. |
Note:
1.For details, please contact our staff at the Investment Services Section.
2. The above information does not constitute an offer, an invitation or a solicitation for an application or offer to invest in the Currency Linked Premium Deposit or enter into any transaction by any person, or a recommendation to invest in the Currency Linked Premium Deposit or enter into any transaction. The information contained above is being provided at your request and for your information only.
3. The "Master Terms and Conditions" or the "Master Terms and Conditions for VIP Banking" (for VIP Banking Customer)(in particular, the provisions relating to Currency Linked Deposit) together with the Confirmation, leaflet and Important Facts Statement govern your investment in Currency Linked Premium Deposit.
4. The Chinese version is for reference only and if there is any discrepancy between the English and Chinese version, the English version shall prevail.
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