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CPI - Currency Linked Investment | Investments | HSBC HK Fx linked structured deposit

Foreign-currency-linked structured products are big business in Hong Kong, but the methods banks use to market them are controversial. If you walk into a bank you may spot signs source the teller queue displaying attractive deposit rates in a foreign currency. If you ask about them, you'll be whisked off to a special room to fx linked structured deposit to an investment fx linked structured deposit, who will introduce you to an investment that is commonly sold in Hong Fx linked structured deposit Make no mistake, these instruments are big business.

A study by the Securities and Futures Commission found that currency-linked instruments comprised 65 per cent of all structured products sold to check this out public. But despite their branding, these products are not deposits at all. The retail investor is selling a put option to the bank.

This is a risky bet that often results in losses for the investor, who may not even understand the concept of a put option, let alone its value. This is how it works. A customer agrees fx linked structured deposit buy a foreign currency at a set rate for a set period of time.

If the market rate for the currency falls below this set rate the investor takes a loss. In return for taking the risk, a customer gets "enhanced yield".

An HSBC fact sheet indicates, for example, that a customer could in usa location paid All the Australian dollar has to do is stay constant against the Hong Kong dollar for the two-week life of the instrument.

Typically investors buy the instruments for one- to two-week periods, and keep turning them over. They keep making money out of them fx linked structured deposit they don't - the trade will go against the investors, who will be left holding a chunk of a devalued foreign currency Black Swan author Nassim Taleb memorably described such investing tactics as picking up pennies in front of a steam roller.

Most investors would have no clue if they are getting a fair deal for the put option they are selling. The bank knows the fx linked structured deposit because they understand pricing models and have access to the interbank market, where these puts are traded. Investors have to take it on faith that they are getting a fair price for what the bank is buying from them.

All is click here when there is full disclosure, they say. Banks' information on these instruments is clear. The documentation explains fx linked structured deposit bold letters that the instruments are structured products that use derivatives and that they are fx linked structured deposit principal protected. Hong Kong is unusual in the freedom allowed to banks to trade derivatives with retail investors.

Banks are marketing these foreign currency structured products as deposits. Citi last year changed the name of its product from Premium Deposit to Premium Account to "avoid misunderstanding from the fx linked structured deposit that this is a pure deposit with the protection under the Hong Kong Deposit Protection Scheme", said Josephine Lee at Citibank Global Source Banking.

A derivatives expert who wishes to go unnamed says Hong Kong banks last year debated whether to describe fx linked structured deposit structured products as "deposits". Some fx linked structured deposit changed the name of the instrument, and others did not. But in the case of any of products where risk is taken … you can lose money. Francis Edwards, a derivatives and structured products partner at law firm Clifford Chance, says the currency-linked structured investments are not equivalent to a time deposit.

This is ultimately a product that involves embedded derivatives so investors should look beyond any deposit label," he says. The Hong Kong Monetary Authority says the use of the term "deposit" in the marketing fx linked structured deposit currency-linked structured products "is not disallowed".

Banks, in fact, can call their currency-linked structured products anything they like, because the marketing material for such instruments is not screened by the SFC. The commission decided in to treat currency derivatives as a "treasury instrument", or a tool for small businesses to manage their currency risks, http://pay.slovologos.info/casino-gambling-online.php not as an investment product for the mass market, fx linked structured deposit is how banks see them.

Banks are also free to display the instrument's high indicated returns in signs in bank teller queues. The rates for the complex product are presented side-by-side with government-guaranteed time deposits, with all seemingly part of the same family of banking plans. Bear in please click for source what this means for a customer.

He or she could be standing in line for the teller at a bank and see a sign advertising stellar deposit rates for different currencies. When they approach the teller, they might then inquire about these rates, particularly as Hong Kong dollar deposit rates are effectively zero. The client will then continue reading taken to another room and pitched a short-dated currency derivative.

An adviser said a person taking a Deposit Plus plan needed to fill in a risk-profile questionnaire standard procedure for any investment and also watch a minute online video about trading derivatives. The HKMA says that it lets banks market their investment products in general banking areas, more info that it specifically lets banks advertise rates for currency-linked structured products alongside their time deposits.

Does this create confusion? For anyone with lingering questions about whether these structured products are equivalent to ordinary deposits, HSBC spokeswoman Yvonne Chuang says this: Skip to main content. Hong Kong banks' marketing of FX-linked structured products sparks concern. Monday, 29 Slots 7 free red, Tuesday, 30 July,4: You fx linked structured deposit signed up.

We think you'd also like. Thank you You are on the list. This article appeared in the South China Morning Post print edition as: When is a deposit not a deposit?

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View detailed risk disclosure. Please also refer to the offering documents for further details including risk factors. Call Offer chance to earn a higher return than a conventional time deposit based on the bullish or bearish performance of the underlying FX exchange.

Click here to view Different Payoff Scenarios. Capital protected investment that offers potential enhanced return based on the performance of the Interest Rate Reference Index fx linked structured deposit. Capital Protected investment with periodic interest payment linked to an interest rate real app money android bingo index.

Enjoy a higher potential return by capitalizing on the price movement of underlying stock s. Assuming that the Bank becomes insolvent during the fx linked structured deposit of this product or defaults on its obligations under this product, you can only claim as its unsecured creditor. You may get nothing back and suffer a total loss of your best online casino amount. Assume AUD fix at fixing is 0.

In this fx linked structured deposit, the potential loss from the product could offset or even exceed the potential gain if deposit currency i. AUD depreciates against your home currency i. The above scenarios are provided for illustrative purposes only, and do not reflect a complete analysis of all possible gain and loss scenarios that may arise during any actual investment.

No representation or warranty is made by the Bank that any scenario described above can be duplicated under real investment conditions. Actual results may vary from the results shown above, and variations may be material. Customer can benefit from investing in Structured Products: Return - by participating in the performance of various underlying assets to achieve a higher potential return in some market situation Capital Protection - some types of Structured Products offer investors principal protection at maturity Callable - some Structured Products come with auto-callable or callable feature, which enable the investors to receive interest return and their fx linked structured deposit capital earlier than maturity.

Portfolio diversification - allowing diversification through participation in the performance of different assets or markets. The information shown here this website is neither a recommendation, an offer, nor a solicitation for any investment product or service. You should carefully consider whether any investment product or service mentioned herein is appropriate for you in view of your personal circumstances.

Past performance is no guide to future performance. Investors should refer to the individual product explanatory memorandum or offering document for further details and risks involved. The price of investment products may move up or down.

Losses may be incurred as well as profits made as a result of buying and selling investment products. Open Menu Close Menu Menu. Register Register Fx linked structured deposit enter to register for internet banking.

Top of main content Important Risk Warning: Select to Expand Select to Collapse. Structured Investment Deposit is a structured investment product involving derivatives. The investment decision is yours but you should not invest fx linked structured deposit Structured Investment 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.

Investors should not make investment decision based on this marketing material alone. Investment involves risk and past performance is not indicative of future performance. The price of structured products may move up or down.

Losses may be incurred as well as profits made as a result of buying and selling structured products. If you are looking fx linked structured deposit However, if the Bank becomes insolvent or default on its obligations under this product, you could suffer a total loss of your deposit amount.

Low Minimal click to see more of losing a significant portion of your capital over the term of the investment although this is not guaranteed. Expected to demonstrate minimal price fluctuations over short periods of time.

Capture wealth growth Offer yield enhancement opportunity to increase your interest. Enhanced potential returns Offer chance to earn a higher return than a conventional time deposit based on the bullish fx linked structured deposit bearish performance of the underlying FX exchange. How much does it cost? Risks selected Related products Eligibility Additional information.

More ways to invest Deposit Plus Provide enhanced return while meeting your need for foreign currencies. Interest Rate Range Accrual Capital fx linked structured deposit investment that offers potential enhanced return based read article the performance of the Interest Rate Reference Index e. Capped and Floored Floater Deposit Capital Protected investment with periodic interest payment linked to an fx linked structured deposit rate reference index.

Equity Linked Investment Enjoy a higher potential return by capitalizing on the fx linked structured deposit movement of underlying stock s. What are Structured Products? And How does it work? Select to expand Select to collapse. How can I benefit from investing in Structured Products?

Disclaimer Select to Expand Select to Collapse The information shown in this website is neither a recommendation, an offer, nor a solicitation for any investment product or service. Place a structured deposit using your preferred currency e. If exchange rate moves as you expected. If exchange rate moves against your expectation. Best case scenario above the trigger rate 0. Best case scenario equals the trigger rate 0. Low deposit loans australia case scenario below the trigger rate 0.

Best case scenario above the trigger rate and best case scenario equals the trigger rate is Worst case scenario below the trigger this web page is Best case scenario above the trigger rate and best case scenario equals the trigger rate is 5. Worst case scenario below the trigger rate is 3.


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