How the Currency-Linked Capital Protected Investment Product – European (Bullish/Bearish) Works
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The Bank pre-sets the Trigger Level. |
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Investors choose a bullish or bearish view on different currencies. |
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On the Final Exchange Rate Determination Date, the Final Exchange Rate is compared with the Trigger Level to determine the return at maturity. If the exchange rate moves with the investors’ anticipation, a potential return can be gained. Even the exchange rate moves against the investors’ anticipation, investors can still get the guaranteed investment amount and the minimum return (if any). |
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The investment amount and return (if any) at maturity will be settled in the Base Currency. |
| Scenario at Maturity |
Total Return at Maturity |
| Exchange rate moves along with investors’ anticipation |
Guaranteed Investment Amount + Potential Return |
| Exchange rate moves against investors’ anticipation |
Guaranteed Investment Amount |
Example 1 – JPY Bullish (USD/JPY)
Investor takes a bullish view on Japanese Yen and believes the exchange rate of USD/JPY will decrease from 115.90 to 111.26 or below after 3 months (i.e. Bullish on Japanese Yen).
| Type of Investment: JPY Bullish |
JPY Bullish (USD/JPY) |
| Base Currency: |
USD |
| Investment Amount: |
USD10,000 |
| Investment Period: |
Around 3 months |
| Guaranteed Investment Amount %: |
100% |
| Trigger Level: |
USD/JPY 111.26 |
| Potential Return Rate (if any): |
1.75% (around 7% p.a.) |
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In Example 1, the total return at maturity is calculated as follows:
| Situation at Maturity |
Total Return at Maturity |
Scenario 1 - Movement of JPY is the same as investor's anticipation
On the Final Exchange Rate Determination Date, the Final Exchange Rate of USD/JPY is 108.25 (i.e. below the Trigger Level) |
Guaranteed Investment Amount x (1 + Potential Return Rate)
= USD10,000 x (1+ 1.75%)
= USD10,175 |
Scenario 2 - Movement of JPY is different from investor's anticipation
On the Final Exchange Rate Determination Date, the Final Exchange Rate of USD/JPY is 118.75 (i.e. above the Trigger Level) |
Guaranteed Investment Amount
= USD10,000
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Note:All figures used in the above example are for illustration only. The actual return may be higher or lower than those used in this example.
Example 2 – JPY Bearish (USD/JPY)
Investor takes a bearish view on Japanese Yen and believes the exchange rate of USD/JPY will increase from 115.90 to 119.38 or above after 3 months (i.e. Bearish on Japanese Yen).
| Type of Investment: |
JPY Bearish (USD/JPY) |
| Base Currency: |
USD |
| Investment Amount : |
USD10,000 |
| Investment Period: |
Around 3 months |
| Guaranteed Investment Amount %: |
100% |
| Trigger Level: |
USD/JPY 119.38 |
| Potential Return Rate (if any): |
2% (around 8% p.a.) |
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In Example 2, the total return at maturity is calculated as follows :
| Situation at Maturity |
Total Return at Maturity |
| On the Final Exchange Rate Determination Date, the Final Exchange Rate of USD/JPY is 121.55 (i.e. above the Trigger Level) |
Guaranteed Principal x (1 + Potential Return Rate)
= USD10,000 x (1+ 2%)
= USD10,200 |
| On the Final Exchange Rate Determination Date, the Final Exchange Rate of USD/JPY is 110.80 (i.e. below the Trigger Level) |
Guaranteed Investment Amount
= USD10,000
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Note:All figures used in the above example are for illustration only. The actual return may be higher or lower than those used in this example.
How the Currency-Linked Capital Protected Investment Product – American Range Works
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The Bank pre-sets the Trading Range. |
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During the whole Observation Period, if the exchange rate stays within the Trading Range, investors can obtain a potential return. |
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If at anytime during the Observation Period, the exchange rate is outside the Trading Range (i.e. at/below the “Lower Barrier” or at/above the “Upper Barrier”), investors can still obtain the guaranteed investment amount and the minimum return (if any) at maturity. |
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The investment amount and return (if any) at maturity will be settled in the Base Currency. |
| Exchange Rate Movement |
Total Return at Maturity |
| During the whole Observation Period, the exchange rate stays within the Trading Range |
Guaranteed Investment Amount + Potential Return |
| At anytime during the Observation Period, the exchange rate is at/below the “Lower Barrier” or at/above the “Upper Barrier” |
Guaranteed Investment Amount |
Investors anticipate the exchange rate of EUR/USD will be above 1.1472, but below 1.2548 in the next three months.
| Type of Investment: |
JPY Bearish (USD/JPY) |
| Base Currency: |
USD |
| Investment Amount : |
USD10,000 |
| Investment Period: |
Around 3 months |
| Guaranteed Investment Amount %: |
100% |
| Initial Exchange Rate: |
EUR/USD 1.1950 |
| Trading Range: |
EUR/USD 1.1472 ("Lower Barrier") to 1.2548 ("Upper Barrier") (both barriers exclusive) |
| Potential Return Rate (if any): |
1.375% (around 5.5% p.a.) |
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Total return at maturity is calculated as below:
| Situation during the Observation Period |
Total Return at Maturity |
Scenario 1 - Movement of EUR is the same as investor's anticipation
During the whole Observation Period, the Exchange Rate of EUR/USD stays within the Trading Range (i.e. above 1.1472 but below 1.2548) |
Guaranteed Investment Amount x (1 + Potential Return Rate)
= USD10,000 x (1+ 1.375%)
= USD10,137.5 |
Scenario 2 - Movement of EUR is different from investor's anticipation
At any time during the Observation Period, the Exchange Rate of EUR/USD is at / below the “Lower Barrier” or at / above the “Upper Barrier” (i.e. at 1.1472 or below, or at 1.2548 or above) |
Guaranteed Investment Amount
= USD10,000
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Note: All figures used in the above example are for illustration only. The actual return may be higher or lower than those used in this example.
Investors should note that all investments including investment in "Currency-Linked Capital Protected Investment Product" involve risk, please click Risk Factors for details. |
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