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Deposit Plus
How it works
- Choose a deposit currency and a linked currency based on your views and needs.
- One of the currencies must be either Hong Kong or US dollars
- Pair it with another currency: Australian dollar, Canadian dollar, Euro, Pound sterling, New Zealand dollar, Japanese yen or Swiss franc - Choose a deposit period, from one week to six months
- Based on your chosen currencies and deposit period, an interest rate and a conversion rate will be set.
- When your Deposit Plus matures, your principal and interest will be paid in either the deposit or linked currency, depending on the exchange rate upon fixing date (the fixing date will be set out in the Confirmation given to you when you place your Deposit Plus)
Example
| Deposit currency & amount | HKD50,000 |
| Linked currency | Australian dollar |
| Deposit date | 1 August 2008 |
| Fixing date | 14 August 2008 |
| Maturity date | 15 August 2008 |
| Spot exchange rate | 7.3055 |
| Conversion rate | 7.2954 |
| Interest rate | 10.04% |
| Redemption upon maturity | If the AUD/HKD exchange rate is at or above 7.2954 at fixing, the principal and interest will be paid in HKD If the AUD/HKD exchange rate is below 7.2954 at fixing, the principal and interest will be paid in AUD |
As a reference, if HKD50,000 is placed in a conventional 2-week time deposit on 1 Aug 2008, the interest rate is 0.1%p.a
Scenarios* of redemption at maturity:
| Scenario 1 AUD strengthens against HKD vs the conversion rate upon fixing |
Scenario 2 AUD remains constant against HKD vs the conversion rate upon fixing |
Scenarion 3 AUD weakens slightly against HKD vs the conversion rate upon fixing |
Scenario 4 AUD weakens considerably against HKD vs the conversion rate upon fixing |
|
| AUD/HKD upon fixing | 7.4454 | 7.2954 | 7.2800 | 7.1454 |
| Principal + interest | HKD50,192.55 HKD50,000 + HKD50,000 x 10.04% x 14 / 365 |
AUD6,880.03 (HKD50,192.55 / conversion rate 7.2954) |
||
| Return on investment | HKD 192.55 | HKD 192.55 | HKD 86.6** | -HKD 839.45** |
* The above scenarios are for reference only. Return depends upon the market conditions on the fixing date.
** Assume the deposit is converted back to HKD upon maturity and the exchange rate equals to the rate upon fixing.
More Financial Flexibility with an Overdraft Facility
For maximum financial flexibility, you can also enjoy an overdraft facility of up to 85%*** of your Deposit Plus amount during the deposit period.
*** The overdraft limit may change after the deposit matures, depending on the currency in which the principal and interest are paid.
Risk disclosure :
The net return in relation to Deposit Plus will depend upon market conditions prevailing at the deposit fixing time on the deposit fixing date. You must be prepared to incur loss as a result of depreciation in the value of the currency paid. Such loss may offset the interest earned on the deposit and may even result in losses in the principal amount of the deposit. If the deposit currency is not your home currency, and you choose to convert it back to your home currency at maturity, you may make a gain or loss due to exchange fluctuations. If you have any concerns about this product, you should consult our professional financial advisers.
