Currency Linked Principal Guaranteed Investment

Currency Linked Principal Guaranteed Investment (CLPGI) is 100% principal guaranteed if you hold till maturity, it may offer you the chance to earn a higher interest income.

Product Highlights
Currency Linked Principal Guaranteed Investment is a structured product, the return is linked to the performance of the Reference Exchange Rate, you may enjoy a higher potential return if the movement of the Reference Exchange Rate is consistent with your view (i.e. bullish or bearish).  This product is principal guaranteed at maturity.  At the pre-determined time on the Observation Date when the Reference Exchange Rate is determined, the Bank will compare the Trigger Level with the Reference Exchange Rate and determine the interest amount of the product.  The principal and interest amount (if any) will be paid in the Investment Currency at maturity.

Note:

1. For details, please contact our staff at the Investment Services Section.
2. This above information is for your information only, it does not constitute an offer, an invitation or a solicitation for an application or offer to invest in the Currency Linked Principal Guaranteed Investment or enter into any transaction by any person, or a recommendation to invest in the Currency Linked Principal Guaranteed Investment or enter into any transaction.
3. The “Terms for Investment Services” (in particular, the provisions relating to Asset Linked Investment) together with the Term Sheet and Important Facts Statement govern your investment in Currency Linked Principal Guaranteed Investment.
4. If there is any discrepancy between the English and Chinese version, the Chinese version shall prevail.

Illustrative Examples
The following example illustrates various scenarios that determine the return / loss of investment. This example is hypothetical and provided for illustration purpose only, and is not based on any past performance.  The Bank is not making any prediction of future movements of the exchange rates of the relevant currencies.

Assuming that an investor holds a bullish view on AUD/USD; and expects that AUD/USD will appreciate from 1.04 to 1.06 at the pre-determined time on the Observation Date when the Reference Exchange Rate is determined:-

Scenario 1: Best case scenario – If the Reference Exchange Rate is trading at or above the Trigger Level (i.e. Reference Exchange Rate ≥ 1.06) at the pre-determined time on the Observation Date when the Reference Exchange Rate is determined, the investor will receive the principal and a higher interest amount at maturity.

Principal + Interest amount: USD 100,000 x (1 + 2.5% x 90/360) = USD 100,625
Profit = USD 625 

Scenario 2: Worst case scenario – If the Reference Exchange Rate is trading below the Trigger Level (i.e. Reference Exchange Rate < 1.06) at the pre-determined time on the Observation Date when the Reference Exchange Rate is determined, the investor will receive the principal and a lower interest amount at maturity.

Principal + Interest amount: USD 100,000 x (1 + 1% x 90/360) = USD 100,250
Profit = USD 250 

Scenario 3: The Bank becomes insolvent or defaults on its obligations
Assuming that the Bank becomes insolvent during the Tenor of the CLPGI or defaults on its obligations under the CLPGI, the investor can only claim as its unsecured creditor.  The investor may get nothing back and suffer a total loss of his/her principal.

The key risks associated with CLPGI set out below do not represent all possible risks associated with a particular CLPGI for which you are going to invest. If you are in doubt about the nature of or the risks associated with this financial product, you should obtain any necessary and appropriate professional advice before investing in this product.

Principal Guaranteed at Maturity Only – The principal guaranteed feature is only applicable if CLPGI is held to maturity.

Derivative Risk (Not applicable to CLPGI – Fixed Rate Series) – CLPGI is embedded with currency option(s). Option transactions involve risks. When you buy an option, the option value might become worthless if the market moves against your expectation.

Derivative Risk (Only applicable to CLPGI – Fixed Rate Series) – CLPGI – Fixed Rate Series is embedded with currency swap(s). Generally, swap transaction is subject to market risk, credit risk, liquidity risk, legal risk and settlement risk.

Not a Protected Deposit – CLPGI is not equivalent to time deposit and should not be regarded as a substitute for time deposit. CLPGI is not a deposit product and will not be included in the Deposit Protection provided by the Macao SAR Government.

Foreign Exchange Risk (Not applicable to CLPGI – Fixed Rate Series) – The return of CLPGI is linked to the performance of the reference exchange rate(s). 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 is 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.

Foreign Exchange Risk (Only applicable to CLPGI – Fixed Rate Series) – The return of CLPGI – Fixed Rate Series is linked to the difference between the spot rate and forward rate of the deposit currency and linked currency. Movements in exchange rates can be sudden and drastic, and affected by complex political and economic factors. If the deposit currency is 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 CLPGI is not the same as investing in the reference currency pair directly. Even if your view of the market movement of the reference exchange rate(s) is correct, the maximum potential return is limited to the pre-determined interest amount for the CLPGI.

Credit Risk – CLPGI is not supported by any collateral or guarantee. CLPGI is subject to the creditworthiness of the Bank. If the Bank becomes insolvent or goes into liquidation or defaults on its obligations under the CLPGI while it is still outstanding, you will rank as an unsecured creditor of the Bank and could, in the worst case, lose your entire principal irrespective of the terms of the CLPGI.

Liquidity Risk – CLPGI is designed to be held until maturity. CLPGI is not listed on any exchange, has no secondary market and is not transferable. Any termination, cancellation or withdrawal prior to maturity is subject to the sole discretion and consent of the Bank. You may incur significant costs or losses as a result of early termination, cancellation or withdrawal.

Adjustment and Early Termination – The Bank has the right (but not the obligation) to adjust the terms of or to early terminate the CLPGI upon occurrence of certain events. If the terms of CLPGI are adjusted or the CLPGI is terminated by the Bank early, you may suffer a substantial loss under this product.

Conflicts of Interest – Potential conflicts of interest may arise from the different roles played by the Bank, its subsidiaries and/or its affiliates in connection with the CLPGI. The Bank and/or its subsidiaries and/or its affiliates may enter into, adjust or unwind transactions relating to the relevant currencies, whether for its or its subsidiaries’ or its affiliates’ proprietary accounts or for account under management or to facilitate transactions on behalf of you or otherwise. In carrying out these roles, the Bank’s economic interests and those of its subsidiaries and/or its affiliates are potentially adverse to your interest in the CLPGI.

Settlement Risk – Upon entering into the CLPGI, you shall assume all settlement risks relating to the Bank failing to settle the CLPGI on, before or after the maturity date.

Suitability – This is a structured product involving derivatives. The investment decision is yours but you should not invest in CLPGI 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.

For Settlement Fund of the Order Sourced from To-be-received Funds - The Bank has the right to cancel an order if it fails to receive the funds to be received by you from another investment transaction on time and there is no sufficient fund placed by you for settlement. Any cost, charges and losses incurred as a result thereof shall be borne by you.