The Bank of East Asia

Wealth Management

Currency Linked Deposit

Earn potential attractive returns from foreign exchange investments*
with BEA currency linked deposits

Key Features and Risks Disclosure:

Currency Linked Deposits (“CLDs”) are unlisted structured investment products involving derivatives. The investment decision is yours but you should not invest in this product 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.
  

- What are the key features?
- Illustrative Example
   - Best Case Scenario
   - Loss Scenario
   - Worst Case Scenario
   - Default Scenario
   - Scenario Analysis
   - Gain/Loss Diagram
- Principal Brochure

* Subject to investment risk 


Note: Principal Brochure is available in English and Traditional Chinese versions only.
(The Acrobat plug-in is required to view the above content)

 

 

Other Features and Risks Disclosure :

Disclaimer:

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What are the key features?

 

Depost Tenor  :  Generally ranges from 1 week to 1 month.  You may request for a tailor-made tenor to suit your investment strategy.

Currency Pair 

 : 

You may select the Currency Pair among the major currencies as agreed by the Bank, such as USD, EUR, JPY, GBP, AUD, NZD, CAD, CNY, HKD and CHF.

Coupon Amount

 

 

 : 

 

 

 

The Coupon amount is a cash amount calculated as follows:

Coupon Amount

(and, if applicable, converted into the Alternate Currency at the Reference Value).

Settlement at maturity

                                                      

 :  

 

The settlement under the CLD at maturity depends on the exchange rate of the Currency Pair at a specific time on the Determination Date as follows :

  • if there is no depreciation in the Alternate Currency relative to the Deposit Currency to or beyond the Reference Value, you will receive on the Maturity Date a cash amount in the Deposit Currency equal to the sum of the Deposit Amount and the Coupon Amount. In this case, you will make a gain which is capped at the Coupon Amount; or
  • if there is a depreciation in the Alternate Currency relative to the Deposit Currency to or beyond the Reference Value, you will receive on the Maturity Date a pre-fixed cash amount in the Alternate Currency equal to the sum of the Deposit Amount and the Coupon Amount, converted into the Alternate Currency at the Reference Value. In this case, you will be exposed to further depreciation in the Alternate Currency relative to the Deposit Currency and you may suffer a loss or substantial loss of your original investment.

 

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Illustrative Example


The following hypothetical examples are for illustrative purposes only. They do not reflect a complete analysis of all possible gain or loss scenarios and must not be relied on as an indication of the actual performance of the Currency Pair or the CLD.

Example: On 7th July 20xx, AUD/HKD is trading at 6.0614 (i.e.  HKD6.0614 is required to convert into AUD1.00).

Each hypothetical example below is based on the following terms:

Currency Pair

 :

AUD/HKD

Deposit Currency

 : 

HKD

Deposit Amount

 :

HKD100,000.00

Alternate Currency   

 :

AUD

Fixing Value                             

 :

The exchange rate of the Currency Pair at 2 p.m. Hong Kong time on the Determination Date, as determined by the Bank in its sole and absolute discretion by reference to the international foreign exchange market or such other price sources that the Bank reasonably considers appropriate taking into account the then conventional market practice.

Reference Value

 :

6.0224

Trade Date

 :

7th July 20xx

Settlement Date

 :

8th July 20xx

Determination Date          

 :

6th August 20xx

Maturity Date

 :

7th August 20xx

Deposit Tenor

 :

30 days

Coupon Rate

 :

12.875% per annum

Coupon Amount

                                                                 

 :  

Deposit Amount x Coupon Rate x Deposit Tenor / Coupon Date Count Basis
(being HKD100,000.00 x 12.875% x 30 / 365 = HKD1,058.22)

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Best case scenario 

Best case scenario - Fixing Value > Reference Value (where there is no depreciation in AUD against HKD beyond the Reference Value on the Determination Date)

If the Fixing Value is 6.0400, which is above the Reference Value (6.0224) (that is, there is no depreciation in the prevailing market value of AUD relative to HKD beyond the Reference Value), you will receive the Deposit Amount together with the Coupon Amount in HKD on the Maturity Date, equal to HKD101,058.22.

Calculation Method:
= Deposit Amount + Coupon Amount
= HKD100,000.00+ HKD1,058.22
= HKD101,058.22

In this scenario, you make a gain of HKD1,058.22 (representing 1.06% of your Deposit Amount).

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Loss scenario

Loss scenario - Fixing Value < Reference Value (where there is a slight depreciation of AUD against HKD beyond the Reference Value on the Determination Date)

If the Fixing Value is 5.6000, which is below the Reference Value (6.0224) (that is, there is a slight depreciation in the prevailing market value of AUD relative to HKD beyond the Reference Value), you will receive a pre-fixed amount on the Maturity Date equal to the sum of the Deposit Amount and the Coupon Amount converted into AUD at the Reference Value, being AUD16,780.39.

Calculation Method for the pre-fixed amount in AUD:
= AUD [(Deposit Amount + Coupon Amount) / Reference Value]    
= AUD [(HKD100,000.00+ HKD1,058.22) / 6.0224]                         
= AUD16,780.39

If you are able to immediately convert the pre-fixed AUD amount into HKD at the prevailing exchange rate of 5.6000, the value of the cash amount you receive on the Maturity Date will be:
= HKD(AUD 16,780.39 x 5.6000)
= HKD93,970.18

In this scenario, you will suffer a loss of HKD6,029.82 (representing 6.03% of your Deposit Amount).

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Worst case scenario 

Worst case scenario - Fixing Value = 0 (where there is a substantial depreciation of AUD against HKD beyond the Reference Value on the Determination Date)

If the Fixing Value is 0, which is below the Reference Value (6.0224) (that is, there is a substantial depreciation in the prevailing market value of AUD relative to HKD), you will receive a pre-fixed amount on the Maturity Date equal to the sum of the Deposit Amount and the Coupon Amount converted into AUD at the Reference Value, being AUD16,780.39.

Calculation Method for the pre-fixed amount in AUD:
= AUD [(Deposit Amount + Coupon Amount) / Reference Value]    
= AUD [(HKD100,000.00 + HKD1,058.22) / 6.0224]                         
= AUD16,780.39

If you are able to immediately convert the pre-fixed AUD amount into HKD at the prevailing exchange rate of 0, the value of the cash amount you receive on the Maturity Date will be:
= HKD(AUD 16,780.39 x 0)
= HKD0

In this scenario, you will suffer a loss of HKD100,000.00 (representing 100% of your Deposit Amount).

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Default scenario

Default scenario - The Bank becomes insolvent or defaults on its obligations

Assuming that the Bank becomes insolvent during the Deposit Tenor or defaults on its obligations under the Currency Linked Deposit, you can only claim as unsecured creditor of the Bank regardless of the performance of the Currency Pair.  You may get nothing back and suffer a loss of 100% of your Deposit Amount.

Coupon Amount: HKD0
Deposit Amount: HKD0 (loss of 100% of your Deposit Amount)

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 Scenario Analysis       

  Scenario analysis

 Scenario analysis note

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Gain/Loss Diagram     

Gain Loss Diagram       

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