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How the Index-Linked Capital Protected Investment Product- European (Bullish/Bearish) Works
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The Bank pre-sets the Trigger Index Level. |
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Investors choose a bullish or bearish view on the Underlying Index. |
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On the Final Index Level Determination Date, the Final Index Level is compared with the Trigger Index Level to determine the return at maturity. If the Index Level moves along with the investors’ anticipation, a Potential Return can be gained. Even if the Index Level moves against the investors’ anticipation, investors can still get the Guaranteed Investment Amount. |
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Investors can receive the Guaranteed Investment Amount and Potential Return (if any) at maturity. |
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The investment amount and return at maturity will be settled in the Base Currency. |
Scenario at Maturity
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Total Return at Maturity
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| Scenario 1 - Market moves along with investors’ anticipation |
Guaranteed Investment Amount + Potential Return |
| Scenario 2 - Market moves against investors’ anticipation |
Guaranteed Investment Amount |
Illustrative Example 1 – Hang Seng Index Bullish
Investors take a bullish view on Hang Seng Index and believe it will increase from Initial Index Level to Trigger Index Level or above after 3 months.
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Type of Investment: Hang Seng Index Bullish |
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Base Currency: USD |
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Investment Amount: USD10,000 |
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Investment Period: Around 3 months |
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Potential Return Rate: 1.5% (around 6% p.a.) |
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In Example 1, the total return at maturity is calculated as follows:
Scenario at Maturity
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Total Return at Maturity
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Scenario 1 - Market moves along with investors’ anticipation
On the Final Index Level Determination Date, Final Index Level of Hang Seng Index is above the pre-set Trigger Index Level) |
Guaranteed Investment Amount x (1 + Potential Return Rate)
= USD10,000 x ( 1 + 1.5% )
= USD10,150
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Scenario 2 - Market moves against investors’ anticipation
On the Final Index Level Determination Date, Final Index Level of Hang Seng Index is below the pre-set Trigger Index Level) |
Guaranteed Investment Amount
= USD10,000
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Illustrative Example 2 – Hang Seng Index Bearish
Investors take a bullish view on Hang Seng Index and believe it will decrease from Initial Index Level to Trigger Index Level or below after 6 months.
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Type of Investment: Hang Seng Index Bearish |
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Base Currency: HKD |
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Investment Amount: HKD100,000 |
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Investment Period: Around 6 months |
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Potential Return Rate: 2.5% (around 5% p.a.) |
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In Example 2, the total return at maturity is calculated as follows:
Scenario at Maturity |
Total Return at Maturity |
Scenario 1 - Market moves along with investors’ anticipation
On the Final Index Level Determination Date, Final Index Level of Hang Seng Index is below the pre-set Trigger Index Level)
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Guaranteed Investment Amount x (1 + Potential Return Rate)
= HKD100,000 x ( 1 + 2.5% )
= HKD102,500 |
Scenario 2 - Market moves against investors’ anticipation
On the Final Index Level Determination Date, Final Index Level of Hang Seng Index is above the pre-set Trigger Index Level)
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Guaranteed Investment Amount
= HKD100,000
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How the Index-Linked Capital Protected Investment Product – American (Range/Double Range) Works
American (Range)
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The Bank pre-sets the Trading Range. |
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If the Closing Index Level of the Underlying Index of each Observation Day stays within the Trading Range, investors can obtain the Potential Return on the Maturity Date. If the Closing Index Level of the Underlying Index of any Observation Day is outside the Trading Range (i.e. at/below the “Lower Barrier” or at/above the “Upper Barrier”), investors will not get the Potential Return but can still obtain the Guaranteed Investment Amount on the Maturity Date. |
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Investors can receive the Guaranteed Investment Amount and Potential Return (if any) at maturity. |
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The investment amount and return at maturity will be settled in the Base Currency. |
American (Double Range)
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The Bank pre-sets Trading Range 1 & Trading Range 2. |
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If the Closing Index Level of the Underlying Index of each Observation Day stays within Trading Range 1, investors can obtain Potential Return 1 on the Maturity Date. If the Closing Index Level of the Underlying Index of any Observation Day is at/below “Lower Barrier 1” or at/above “Upper Barrier 1”, but the Closing Index Levels of all Observation Days stay within Trading Range 2, investors can get Potential Return 2 on the Maturity Date. If the Closing Index Level of the Underlying Index of any Observation Day is outside Trading Range 2 (i.e. at/below “Lower Barrier 2” or at/above “Upper Barrier 2”), investors will not get Potential Return 1 or Potential Return 2 but can still obtain the Guaranteed Investment Amount on the Maturity Date. |
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Investors can receive the Guaranteed Investment Amount and Potential Return (if any) at maturity. |
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The investment amount and return at maturity will be settled in the Base Currency. |
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American
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Market Performance
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Total Return at Maturity |
| Range |
Scenario 1 - The Closing Index Level of the Underlying Index of each Observation Day stays within the Trading Range. |
Guaranteed Investment Amount + Potential Return |
| Scenario 2 - The Closing Index Level of the Underlying Index of any Observation Day is at/below the “Lower Barrier” or at/above the “Upper Barrier”. |
Guaranteed Investment Amount + Minimum Return (if any)
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| Double Range |
Scenario 1 - The Closing Index Level of the Underlying Index of each Observation Day stays within Trading Range 1. |
Guaranteed Investment Amount + Potential Return 1 |
| Scenario 2 - The Closing Index Level of the Underlying Index of any Observation Day is at/below “Lower Barrier 1” or at/above “Upper Barrier 1”, but the Closing Index Levels of all Observation Days are still within Trading Range 2. |
Guaranteed Investment Amount + Potential Return 2 |
| Scenario 3 - The Closing Index Level of the Underlying Index of any Observation Day is at/below “Lower Barrier 2” or at/above “Upper Barrier 2”. |
Guaranteed Investment Amount
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Illustrative Example 3 – Hang Seng China Enterprises Index (American Range)
Investors anticipate that the Hang Seng China Enterprises Index will be within Trading Range during the next 3 months.
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Type of Investment: Hang Seng China Enterprises
Index (American Range) |
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Base Currency: USD |
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Investment Amount: USD10,000 |
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Investment Period: Around 3 months |
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Trading Range: “Lower Barrier” to “Upper Barrier” (both barriers exclusive) |
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Potential Return Rate: 1.375% (around 5.5% p.a.) |
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In Example 3, the total return at maturity is calculated as follows:
During the whole Observation Period
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Total Return at Maturity |
Scenario 1 - Market moves along with investors’ anticipation
The Closing Index Level of Hang Seng China Enterprises Index of each Observation Day stays within the Trading Range
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Guaranteed Investment Amount x (1 + Potential Return Rate)
= USD10,000 x ( 1 + 1.375% )
= USD10,137.5 |
Scenario 2 - Market moves against investors’ anticipation
The Closing Index Level of Hang Seng China Enterprises Index of any Observation Day is at/below the “Lower Barrier” or at/above the “Upper Barrier”
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Guaranteed Investment Amount
= USD10,000
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How the Index-Linked Capital Protected Investment Product – European (Range/Double Range) Works
European (Range)
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The Bank pre-sets the Trading Range. |
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On the Final Index Level Determination Date, if the Final Index Level of the Underlying Index is within the Trading Range, investors can obtain Potential Return on the Maturity Date. Or otherwise, on the Final Index Level Determination Date, if the Final Index Level of the Underlying Index is outside the Trading Range (i.e. at/below the “Lower Barrier” or at/above the “Upper Barrier”), investors will not get the Potential Return but can still obtain the Guaranteed Investment Amount on the Maturity Date. |
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Investors can receive the Guaranteed Investment Amount and Potential Return (if any) at maturity. |
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The investment amount and return at maturity will be settled in the Base Currency. |
European (Double Range)
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The Trading Range 1 and Trading Rage 2 will be pre-determined by the Bank |
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On the Final Index Level Determination Date, if the Final Index Level of the Underlying Index is within Trading Range 1, investors can obtain Potential Return 1 on the Maturity Date. If on the Final Index Level Determination Date, the Final Index Level of the Underlying Index is at/below “Lower Barrier 1” or at/above “Upper Barrier 1”, but is within Trading Range 2, investors can get Potential Return 2 on the Maturity Date. Or otherwise, on the Final Index Level Determination Date, if the Final Index Level of the Underlying Index is outside Trading Range 2 (i.e. at/below “Lower Barrier 2” or at/above “Upper Barrier 2”), investors will not get Potential Return 1 or Potential Return 2 but can still obtain the Guaranteed Investment Amount on the Maturity Date. |
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Investors can receive the Guaranteed Investment Amount and Potential Return (if any) at maturity. |
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The investment amount and return at maturity will be settled in the Base Currency. |
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European |
Market Performance |
Total Return at Maturity |
| Range |
Scenario 1 - On the Final Index Level Determination Date, the Final Index Level of the Underlying Index stays within the Trading Range. |
Guaranteed Investment Amount + Potential Return |
| Scenario 2 - On the Final Index Level Determination Date, the Final Index Level of the Underlying Index is at/below the “Lower Barrier” or at/above the “Upper Barrier”. |
Guaranteed Investment Amount
= USD10,000
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| Double Range |
Scenario 1 - On the Final Index Level Determination Date, the Final Index Level of the Underlying Index stays within Trading Range 1. |
Guaranteed Investment Amount + Potential Return 1 |
| Scenario 2 - On the Final Index Level Determination Date, the Final Index Level of the Underlying Index is at/below “Lower Barrier 1” or at/above “Upper Barrier 1”, but still within Trading Range 2. |
Guaranteed Investment Amount + Potential Return 2 |
| Scenario 3 - On the Final Index Level Determination Date, the Final Index Level of the Underlying Index is at/below “Lower Barrier 2” or at/above “Upper Barrier 2”. |
Guaranteed Investment Amount
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Illustrative Example 4 – Hang Seng China Enterprises Index (European Double Range)
Investors anticipate that the Hang Seng China Enterprises Index will be within Trading Range 1 during the next 3 months; even if the market moves severely, investors anticipate that it will remain within Trading Range 2.
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Type of Investment: Hang Seng China Enterprises Index (European Double Range) |
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Base Currency: USD |
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Investment Amount: USD10,000 |
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Investment Period: Around 3 months |
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Trading Range 1: “Lower Barrier 1” to “Upper Barrier 1” (both barriers exclusive) |
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Trading Range 2: “Lower Barrier 2” to “Upper Barrier 2” (both barriers exclusive) |
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Potential Return Rate 1: 1.375% (around 5.5% p.a.) |
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Potential Return Rate 2: 1% (around 4% p.a.) |
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In Example 4, the total return at maturity is calculated as follows:
During the whole Observation Period |
Total Return at Maturity |
Scenario 1 - Market moves along with investors’ anticipation
On the Final Index Level Determination Date, the Final Index Level of the Hang Seng China Enterprises Index stays within Trading Range 1
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Guaranteed Investment Amount x (1 + Potential Return Rate 1)
= USD10,000 x ( 1 + 1.375% )
= USD10,137.5
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Scenario 2 - Market moves along with investors’ anticipation
On the Final Index Level Determination Date, the Final Index Level of the Hang Seng China Enterprises Index is at/below “Lower Barrier 1” or at/above “Upper Barrier 1”, but within Trading Range 2
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Guaranteed Investment Amount x (1 + Potential Return Rate 2)
= USD10,000 x ( 1 + 1% )
= USD10,100
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Scenario 3 - Market moves against investors’ anticipation
On the Final Index Level Determination Date, the Final Index Level of the Hang Seng China Enterprises Index is at/below “Lower Barrier 2” or at/above “Upper Barrier 2”
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Guaranteed Investment Amount
= USD10,000
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