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Bull Equity Linked Investments
How it works
- Choose the underlying stock or underlying fund (listed on the Hong Kong Stock Exchange), exercise price and tenor from current Bull ELI offers.
- Purchase a Bull ELI at a discount to the expiry amount.
- At the end of your selected tenor, your return on investment will depend on the closing price of the underlying asset on the valuation date (being three business days in Hong Kong prior to the end of the tenor).
| On the valuation date, if the closing price of the underlying asset is: | For each Bull ELI, you will receive on the settlement date: | Return per Bull ELI++: |
| 1. Above or equal to the exercise price | The expiry amount (less any cash settlement expenses*) | Profit equals to the difference between the Bull ELI purchase consideration and the expiry amount |
| 2. Below the exercise price | The underlying asset+ (the quantity is equal to the entitlement,subject to payment of any physical settlement expenses**) OR | Uncertain, it depends on the price you sell the underlying asset received |
| The share valuation amount +++(this amount is based on the closing price of the underlying stock on the valuation date and the entitlement, less any cash settlement expenses*) | Loss equals to the difference between the asset valuation amount and the Bull ELI purchase consideration |
+ Applicable if (i) the asset purchase option is applicable and you have elected such option, or are deemed to have elected, to receive physical delivery of the underlying asset in lieu of cash payment of the share asset valuation amount on the settlement, or (ii) the asset purchase option is not applicable.
++ The calculation of "Return per Bull ELI" does not take into account any settlement or delivery expenses payable by an investor upon termination of the Bull ELIs (see "Fees" below)
+++ Applicable if the asset purchase option is applicable and you have opted out of such option to receive cash payment of the asset valuation amount in lieu of physical delivery of the underlying asset on the settlement date.
*Cash settlement expenses include all charges, expenses taxes and duties arising from the exercise of the Bull ELI.
**Physical settlement expenses include all expenses, charges, taxes and duties payable in connection with the transfer and receipt of the underlying asset.
Example*
| Tenor | 181 days |
| Underlying Asset | Stock X / Fund X |
| Underlying Spot Price | HKD55 |
| Exercise Price | HKD50 |
| Entitlement (per Bull ELI) | If the Underlying Asset is Stock X: 1 share of Stock X If the Underlying Asset is Fund X: 1 unit of Fund X |
| Expiry Amount (per Bull ELI) | HKD50 |
| Number of Bull ELIs purchased | 5,000 |
| Total Expiry Amount for 5,000 Bull ELIs | HKD250,000 (HKD50 X 5,000 ELIs) |
| Issue Price (expressed as a percentage) | HKD48.40 per Bull ELI (96.80% of the Expiry Amount) |
| Total Issue Price for 5,000 Bull ELIs (the purchase consideration you pay) | HKD242,000 (HKD48.40 x 5,000 Bull ELIs)** |
| Yield-to-Maturity*** | 6.67% p.a. |
| Trade Date | 3 October 2007 |
| Payment Date† | 8 October 2007 |
| Valuation Date | 3 April 2008 |
| Settlement Date++ | 9 April 2008 |
* This is for illustrative purposes only. Bull ELIs may be issued with different terms and longer or shorter tenors.
** Exclusive of all costs and expenses.
| *** | Yield-to-Maturity equals: | 100% - Bull ELI price | X | 365 days for HKD Bull ELI or 360 days for USD Bull ELI |
| Bull ELI Price | number of days from Payment Date to Settlement Date |
† Three business days in Hong Kong after the trade date (excluding Saturdays and Sundays).
++ Three business days in Hong Kong after the valuation date (excluding Saturdays and Sundays).
Return on the Settlement Date:
| Scenario 1 :Closing Price > Exercise Price | Scenario 2 :Closing Price = Exercise Price | Scenario 3 :Closing Price < Exercise Price | |
| Total Expiry Amount | HKD250,000 (HKD50 x 5,000 Bull ELIs) | ||
| Tenor (from Payment Date to Settlement Date) | 181 days | ||
| On purchase, you pay the Total Issue Price (a) | HKD242,000 (96.80% of Total Expiry Amount) | ||
| On Valuation Date, assuming that the Closing Price of Stock X / Fund X is | HKD57 | HKD50 | HKD47.50 |
| On the Settlement Date, you receive the Settlement Amount§ (b) | (Equal to the Expiry Amount) HKD250,000 (cash) |
(Equal to the Expiry Amount) HKD250,000 (cash) |
(Equal to the Entitlement)‡ or the Asset Valuation Amount# 5,000 shares or 5,000 units‡ or HKD237,500(cash)# |
| Market value of the Underlying Stock stock X/ Fund X (valued on the Valuation Date) | HKD285,000 (HKD57 x 5,000 stock X/ Fund X) |
HKD250,000 (HKD50 x 5,000 stock X/ Fund X) |
HKD237,500 (HKD47.50 x 5,000 stock X / fund X) |
| Return on investment § (c) (c) = (b) - (a) |
HKD8,000 (HKD250,000 - HKD242,000) |
HKD8,000 (HKD250,000 - HKD242,000) |
-HKD4,500 (HKD237,500‡ - HKD242,000) |
‡ If the asset purchase option is applicable and you have elected, or are deemed to have elected such option, to receive physical delivery of stock X/ Fund X in lieu of cash payment of the asset valuation amount on the settlement date or the asset purchase option is not applicable, the above example assumes that you sell stock X/ Fund X immediately upon settlement at a selling price which is the same as the closing price of stock X/ Fund X on the valuation date.
§ Effect of other costs and expenses has not been included in the above example (see "Fees" below).
# Applicable if the asset purchase option is applicable and you have opted out of such option to receive cash payment of the asset valuation amount in lieu of physical delivery of the underlying asset on the settlement date. The asset valuation amount equals to the closing price of stock X/ Fund X on the valuation date x Entitlement
Scenario Analysis Disclaimer:
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 in respect of any actual investment. No representation or warranty is made by The Hongkong and Shanghai Banking Corporation Limited (HSBC) that any scenario described above represents or will represent the real investment conditions and returns. Actual results and returns on the Bull ELIs may vary from the results shown above, and such variations may be material.
Fees
- No subscription charge.
- If the underlying asset is to be delivered on the settlement date, the following charges will apply:
- Stamp duty of 0.1% of the transaction amount of the underlying asset deliverable at the value of the closing price (rounded up to the nearest dollar) on the valuation date.
- Deposit transaction charge of HKD5 per board lot of the underlying asset deposited into your investment services/securities account, subject to a minimum charge of HKD30 and a maximum charge of HKD200.
- For other securities services, the standard securities charges, as advised by HSBC upon account opening or as notified by HSBC from time to time with reasonable prior notice of any subsequent revisions shall apply. If you have any questions, please contact our staff at any HSBC branch in Hong Kong.
Risk Disclosure
The Bull Equity Linked Investments (ELIs) are not principal protected. Investment in ELIs involves risks. The return in relation to an ELI is linked to the performance of the underlying asset and stock market conditions prevailing on the valuation date. Fluctuations in the prices of the underlying asset can be substantial and you must be prepared to receive the asset valuation amount (if the asset purchase option is applicable and you have opted out of such option to receive cash payment of the asset valuation amount in lieu of physical delivery of the underlying asset) or the relevant quantity of the underlying asset (if (i) the asset purchase option is applicable and you have elected, or are deemed to have elected such option to receive physical delivery of the underlying asset in lieu of cash payment of the asset valuation amount or (ii) the asset purchase option is not applicable) on the settlement date, the value of which could be substantially less than the amount of your original investment. Changes in the market price of the underlying asset may not lead to corresponding changes in the market value of the ELI. There will not be a liquid secondary market for the ELIs. The applicable Term Sheet will specify if there is any specific market making arrangements for the ELIs. You should consider whether or how much of your investment portfolio should comprise ELIs based on your own risk appetite, investment experience and investment objectives. If you have any concerns about this product, or are uncertain about the suitability of asset allocation in your investment portfolio, you should consult your professional financial advisor. You should also refer to the Information Memorandum, the relevant information in the Base Disclosure Document (which is incorporated by reference into the Information Memorandum), the relevant Product Booklet and the applicable Term Sheet for further details on the ELIs and the risks involved before deciding whether to invest in the ELIs. The relevant Term Sheet will tell you whether any addendum to the above documents has been published. This website does not constitute an offer or an invitation to purchase or to induce an offer by any person to purchase or acquire or invest in the ELIs or any securities or related financial instruments.
The Securities and Futures Commission of Hong Kong (the "SFC") has authorized the issue of this webpage under Section 105(1) of the Securities and Futures Ordinance of Hong Kong (other than the navigation menu, the "Stock Quote" search function, all visual images and all hyperlinks to other websites or to other webpages, all of which the SFC has not authorized). SFC's authorization does not imply SFC's endorsement or recommendation of the ELIs. The SFC takes no responsibility as to the issue and contents of this webpage. HSBC takes responsibility as to the issue and contents of this webpage.
