It is a structured investment product that combines a time deposit and a foreign currency option. You can have your principal protected1 and grasp the investment opportunities with a higher interest return than a normal time deposit in response to foreign exchange movement.
How to apply
Receive 100% of the principal amount upon deposit maturity regardless of currency movement1
Potential higher interest return than a normal time deposit in response to the trend of the foreign exchange movement
Capture the foreign exchange movement by adopting a bullish or bearish strategy
Get back your return in the currency of your deposit at maturity
Tenor varies from 3 to 6 months in general with a maximum of 12 months, subject to your needs
Up to 10 currencies for your choice include HKD, USD, AUD, CAD, NZD, JPY, CHF, GBP, EUR and CNY
Assume you are holding AUD, and the current exchange rate of AUD/HKD is 5.5900. You take a bullish view on the AUD against the HKD and forecast AUD/HKD will be 5.6000 or above after 3 months.
| This scenario analysis for Currency Linked Target Rate Deposit is based on the following terms (CNY Bullish view) | |
|---|---|
| Deposit Currency | CNY |
| Principal Amount | CNY 100,000.00 |
| Deposit Tenor | 6 Months (180 days) |
| Currency Pair | USD/CNY |
| Initial Fixing Rate | 6.0972 (USD/CNH) |
| Strike Rate | 6.0362 (USD/CNH) |
| Fixing Rate | The exchange rate of the Currency Pair on the Exchange Rate Fixing Date |
| Interest Rate (1) Target Return Rate OR (2) Minimum / Lower Return Rate(it may be zero) |
If the Fixing Rate on the Exchange Rate Fixing Date is: (1) at or below of the Strike Rate, 5.60% p.a. will be applied; OR otherwise (2) 1.00% p.a. will be applied |
Assuming the Fixing Rate is AT or BELOW the Strike Rate on the Fixing Date, you will receive the Principal Amount and an Interest Amount in the Deposit Currency calculated at the Target Return Rate as follows:
= Principal Amount + Interest Amount calculated at the Target Return Rate
= CNY 100,000.00 + CNY 2,800.00
= CNY 102,800.00
Interest Amount
= CNY 100,000.00 × 5.60% ÷ 360 × 180
= CNY 2,800.00
In this scenario, you have an actual gain of an Interest Amount of CNY 2,800.00, representing an actual rate of return of 2.80% (i.e. Interest Amount (CNY 2,800.00) ÷ Principal Amount (CNY 100,000.00) x 100%) (rounded to the nearest 4 decimal places). This is the maximum potential gain under Currency Linked Target Rate Deposit even if your view on the Fixing Rate is correct.
Assuming the Fixing Rate is ABOVE the Strike Rate on the Fixing Date, you will receive the Principal Amount and an Interest Amount in the Deposit Currency calculated at the Minimum / Lower Return Rate as follows:
= Principal Amount + Interest Amount calculated at the minimum / lower Interest Rate
= CNY 100,000.00 + CNY 500.00
= CNY 100,500.00
Interest Amount
= CNY 100,000.00 × 1.00% ÷ 360 × 180
= CNY 500.00
In this scenario, you have an actual gain of an Interest Amount of CNY 500.00, representing an actual rate of return of 0.50% (i.e. Interest Amount (CNY 500.00) ÷ Principal Amount (CNY 100,000.00) x 100%) (rounded to the nearest 4 decimal places)
Assuming that the Bank becomes insolvent or defaults on its obligations under this product, you can only claim as an unsecured creditor of the Bank regardless of the terms of this product. You may get nothing back and may lose all of your Principal Amount of CNY 100,000.00 and the potential Interest Amount even if your view on the movement of exchanges is correct.
| Scenario | Fixing Rate (USD/CNH) |
Total payout on the maturity date | Investment return at maturity (CNY) | Gain or loss against the Principal Amount (Actual %) |
|---|---|---|---|---|
| 1 | 6.0300 | CNY 102,800.00 | CNY 2,800.00 | 2.80% |
| 2 | 6.0400 | CNY 100,500.00 | CNY 500.00 | 0.50% |
| 3 | You will be ranked as an unsecured creditor against the Bank if the Bank becomes insolvent or defaults on its obligations under this product and you may lose the entire Principal Amount of CNY 100,000.00 and the potential Interest Amount. | |||
This scenario is based on the assumption that you convert USD16,393.44 (Principal Amount in Home Currency) to CNY100,000 at the Exchange Rate of 6.1000 (USD/CNH) and invest the Principal Amount CNY100,000 in this product.
Assuming that the Fixing Rate is AT or BELOW the Strike Rate on the Fixing Date, as elaborated under scenario 1 above, you will receive in cash the Principal Amount together with the Interest Amount (i.e. CNY100,000.00 + CNY2,800.00 = CNY102,800.00) payable in CNY on the Maturity Date. If you convert the CNY payments you receive back to USD, the amount you receive will be affected by the prevailing exchange rate between USD and CNY and you will make a gain only if the prevailing exchange rate is below 6.2708 (USD/CNH).
Assuming that the prevailing exchange rate between USD and CNY is 6.0390 (USD/CNH), you will receive USD17,022.69 (CNY102,800.00 / 6.0390). In this example, you will have an actual gain of USD629.25 (USD17,022.69 - USD16,393.44) or 3.84% (USD629.25 / USD16,393.44).
Assuming that the Fixing Rate is ABOVE Strike Rate as elaborated in scenario 2 above, you will receive in cash the Principal Amount together with the Interest Amount (i.e. CNY100,000.00 + CNY500.00 = CNY100,500.00) payable in CNY on the Maturity Date. If you convert the CNY payments you receive back to USD, the amount you receive will be affected by the prevailing exchange rate between USD and CNY.
Assuming that the prevailing exchange rate between USD and CNY is 6.1305 (USD/CNH), you will receive USD16,393.44 (CNY100,500.00 / 6.1305) which is equal to your initial investment amount in your home currency.
Assuming that the Fixing Rate is ABOVE Strike Rate as elaborated in scenario 2 above, you will receive in cash the Principal Amount together with the Interest Amount (i.e. CNY100,000.00 + CNY500.00 = CNY100,500.00) payable in CNY on the Maturity Date. If you convert the CNY payments you receive back to USD, the amount you receive will be affected by the prevailing exchange rate between USD and CNY and you will suffer a loss once the prevailing exchange rate is above 6.1305 (USD/CNH).
Assuming that the prevailing exchange rate between USD and CNY is 6.1613 (USD/CNH), you will receive USD16,311.49 (CNY100,500.00 / 6.1613). In this example, you will have an actual loss of USD81.95 (USD16,311.49 – USD16,393.44) or 0.50% (USD81.95 / USD16,393.44).
In the worst case whereby CNY depreciates to zero, you may lose all of your investment.
This scenario analysis for Currency Linked Target Rate Deposit is based on the following terms (CNY Bullish view):
| Deposit Currency | CNY |
| Principal Amount | CNY 100,000.00 |
| Deposit Tenor | 6 Months (180 days) |
| Currency Pair | USD/CNY |
| Initial Fixing Rate | 6.1000 (USD/CNH) |
| Strike Rate (A): | 6.0390 (USD/CNH) |
| Strike Rate (B): | 6.2000 (USD/CNH) |
| Fixing Rate: | The exchange rate of the Currency Pair on the Exchange Rate Fixing Date |
| Interest Rate: (1) Target Return Rate (A) OR (2) Target Return Rate (B) OR (3) Minimum / Lower Return Rate (it may be zero) |
If the Fixing Rate on the Exchange Rate Fixing Date is: (1) at or below of the Strike Rate (A), 8.00% p.a. will be applied; OR (2) at or below of the Strike Rate (B) but above Strike Rate (A), 3.00% p.a. will be applied; OR otherwise (3) 0.00% p.a. will be applied |
Assuming the Fixing Rate is AT or BELOW the Strike Rate (A) on the Fixing Date, you will receive the Principal Amount and an Interest Amount in the Deposit Currency calculated at the Target Return Rate (A) as follows:
= Principal Amount + Interest Amount calculated at the Target Return Rate (A)
= CNY 100,000.00 + CNY 4,000.00
= CNY 104,000.00
Interest Amount
= CNY 100,000.00 × 8.00% ÷ 360 × 180
= CNY 4,000.00
In this scenario, you have an actual gain of an Interest Amount of CNY 4,000.00, representing an actual rate of return of 4.00% (i.e. Interest Amount (CNY 4,000.00) ÷ Principal Amount (CNY 100,000.00) x 100%) (rounded to the nearest 4 decimal places). This is the maximum potential gain under Currency Linked Target Rate Deposit even if your view on the Fixing Rate is correct.
Assuming the Fixing Rate is AT or BELOW the Strike Rate (B) but ABOVE Strike Rate (A) on the Fixing Date, you will receive the Principal Amount and an Interest Amount in the Deposit Currency calculated at the Target Return Rate (B) as follows:
= Principal Amount + Interest Amount calculated at the Target Return Rate (B)
= CNY 100,000.00 + CNY 1,500.00
= CNY 101,500.00
Interest Amount
= CNY 100,000.00 × 3.00% ÷ 360 × 180
= CNY 1,500.00
In this scenario, you have an actual gain of an Interest Amount of CNY 1,500.00, representing an actual rate of return of 1.50% (i.e. Interest Amount (CNY 1,500.00) ÷ Principal Amount (CNY 100,000.00) x 100%) (rounded to the nearest 4 decimal places). This is the potential gain under Currency Linked Target Rate Deposit even if your view on the Fixing Rate is correct.
Assuming the Fixing Rate is ABOVE the Strike Rate (B) on the Fixing Date, you will receive the Principal Amount and an Interest Amount in the Deposit Currency calculated at the Minimum / Lower Return Rate (i.e. zero) as follows:
= Principal Amount + Interest Amount calculated at the minimum / lower Interest Rate
= CNY 100,000.00 + CNY 0.00
= CNY 100,000.00
Interest Amount
= CNY 100,000.00 × 0.00% ÷ 360 × 180
= CNY 0.00
In this scenario, you can only get back the Principal Amount.
Assuming that the Bank becomes insolvent or defaults on its obligations under this product, you can only claim as an unsecured creditor of the Bank regardless of the terms of this product. You may get nothing back and may lose all of your Principal Amount of CNY 100,000.00 and the potential Interest Amount even if your view on the movement of exchange rates is correct.
| Scenario | Fixing Rate (USD/CNH) |
Total payout on the maturity date | Investment return at maturity (CNY) | Gain or loss against the Principal Amount (Actual %) |
|---|---|---|---|---|
| 1 | 6.0300 | CNY 104,000.00 | CNY 4,000.00 | 4.00% |
| 2 | 6.0600 | CNY 101,500.00 | CNY 1,500.00 | 1.50% |
| 3 | 6.2100 | CNY 100,000.00 | CNY 0.00 | 0.00% |
| 4 | You will be ranked as an unsecured creditor against the Bank if the Bank becomes insolvent or defaults on its obligations under this product and you may lose the entire Principal Amount of CNY 100,000.00 and the potential Interest Amount. | |||
This scenario is based on the assumption that you convert USD16,393.44 (Principal Amount in Home Currency) to CNY100,000 at the Exchange Rate of 6.1000 (USD/CNH) and invest the Principal Amount CNY100,000 in this product.
Assuming that the Fixing Rate is AT or BELOW the Strike Rate (A) on the Fixing Date, as elaborated under scenario 1 above, you will receive in cash the Principal Amount together with the Interest Amount (i.e. CNY100,000.00 + CNY4,000.00 = CNY104,000.00) payable in CNY on the Maturity Date. If you convert the CNY payments you receive back to USD, the amount you receive will be affected by the prevailing exchange rate between USD and CNY and you will make a gain only if the prevailing exchange rate is below 6.3440 (USD/CNH). Assuming that the prevailing exchange rate between USD and CNY is 6.0390 (USD/CNH), you will receive USD17,221.39 (CNY104,000.00 / 6.0390). In this example, you will have an actual gain of USD827.95 (USD17,221.39 - USD16,393.44) or 5.05% (USD827.95 / USD16,393.44).
Assuming that the Fixing Rate is AT or BELOW Strike Rate (B) but ABOVE Strike Rate(A), as elaborated in scenario 2 above, you will receive in cash the Principal Amount together with the Interest Amount (i.e. CNY100,000.00 + CNY1,500.00 = CNY101,500.00) payable in CNY on the Maturity Date. If you convert the CNY payments you receive back to USD, the amount you receive will be affected by the prevailing exchange rate between USD and CNY.
Assuming that the prevailing exchange rate between USD and CNY is 6.1915 (USD/CNH), you will receive USD16,393.44 (CNY101,500.00 / 6.1915) which is equal to your initial investment amount in your home currency.
Assuming that the Fixing Rate is ABOVE Strike Rate (B), as elaborated in scenario 3 above, you will receive in cash the Principal Amount together with the Interest Amount (i.e. CNY100,000.00 + CNY0.00 = CNY100,000.00) payable in CNY on the Maturity Date. If you convert the CNY payments you receive back to USD, the amount you receive will be affected by the prevailing exchange rate between USD and CNY and you will suffer a loss once the prevailing exchange rate is above 6.1000 (USD/CNH).
Assuming that the prevailing exchange rate between USD and CNY is 6.2100 (USD/CNH), you will receive USD16,103.06 (CNY100,000.00 / 6.2100). In this example, you will have an actual loss of USD290.38 (USD16,103.06 – USD16,393.44) or 1.77% (USD290.38 / USD16,393.44).
In the worst case whereby CNY depreciates to zero, you may lose all of your investment.
The illustrative examples above are hypothetical and provided for illustration purpose only. They do not reflect a complete analysis nor all possible factors of all possible potential gain or loss scenarios, are not based on the past performance of the exchange rates of the Currency Pair and must not be relied on as an indication of the actual performance of the exchange rate of the Currency Pair or this product. You should not rely on these examples when making an investment decision. The scenarios assume no fees and charges.
