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Equity Linked Deposit |  |
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- Components of an ELD
- How to place an ELD
- Service Charge
- How does ELD work?
- Return Comparison with Time Deposit
Components of an ELD
| Linked Equity | Please call or visit any of our branch and sub-branches for a list of available Linked Stocks |
| Deposit currency | Hong Kong Dollars |
| Minimum Investment Amount | HK$100,000(Subject to board lot size of relevant Linked Stock) |
| Maximum Investment Amount | No upper limit |
| Deposit period | Negotiable |
| Principal Interest Rate | to be specified by the Bank |
| Early repayment | Not available |
| Reference spot price and strike price | to be agreed at the time of transaction |
| Linked equity lot size | subject to lot size specified by the Hong Kong Stock Exchange |
| Pre-determined quantity of the Linked Stock | Quantity of the Linked Stock which can be bought with the principal amount and interest at the strike price |
| Fixing date | Two business days before maturity date |
How to place an ELD
- Visit any branch or sub-branch of the Bank during normal banking hours;
- Customer service officer of the Bank will provide you with a brochure, a list of Linked Stocks, the ELD Terms and Conditions and the Terms and Conditions for Investment Accounts, and you should read those documents before deciding to place an ELD;
- Open an Investment Account with the Bank if you have not already opened one;
- Select the specifications of the ELD with the assistance of the customer service officer of the Bank;
- Confirm the specifications of the ELD;
- Place the ELD order and the Bank will confirm whether it will accept your ELD order;
- If the Bank accepts your ELD order, it will issue an ELD confirmation on the same day, and you will have to sign the ELD confirmation;
- An amount equal to the principal amount of the ELD will be deducted on the same day from the settlement account designated by you, and no debit will be made unless you have signed the confirmation;
- The specifications of the ELD cannot be changed during the deposit period except that the Bank may make changes where there is a disruption event or an adjustment event.
Service Charge
All fees, charges, operational, administrative and hedging costs incurred by the Bank in offering the ELD are already inherently contained and included in the calculation of interest rates and other variables. When you receive the Linked Stock on the maturity date, you will have to bear the stamp duties, levies, brokerages and other transaction costs (a schedule setting out the relevant charges and costs will be made available by the Bank).
How does ELD work?
All illustrations and comparisons are for reference only and are not indicative of future performance. Any related charges have not been reflected in the illustrations.
| If the closing price of the Linked Stock on the fixing date is : | equal to or above the strike price (Case 1 below) |
below the strike price (Case 2 below) |
| You will receive on the maturity date : | principal amount plus interest on principal amount | pre-determined quantity of the Linked Stock |
Example: Components of an ELD
| Underlying Stock | CHEUNG KONG |
| Discount | 97% |
| Depositing period | 38 Days |
| Interest Rate | 9.33%% p.a.* |
| Reference closing price | HK$67.25 |
| Target price | HK$65.2325 |
| Transaction Day | 12 Oct 2004 |
| Deposit date | 12 Oct 2004 |
| Fixing date | 17 Nov 2004 |
| Maturity date | 19 Nov 2004 |
| Lot size | 1,000 Shares |
| Pre-determined quantity of Linked Stock | 2,000 Shares |
| Principal amount | HK$129,209.93 |
| Interest amount | HK$1,255.07 |
| Principal and interest on maturity date | HK$130,465.00 |
* The interest rate is calculated based on the Bank's 38-day time deposit rate at 0.5% and Bloomberg L.P.'s implied volatility of Cheung Kong at 22.05% on 12 October 2004.
Case 1
You will receive on the maturity date :
Principal and interest = HK$130,465.00
Calculation method = HK$129,209.93+ (HK$129,209.93 x 9.33% x 38/365)
Case 2
You will receive on the maturity date :
2,000 shares of the Linked Stock (Cheung Kong)
Calculation method = HK$130,465.00 ¡M HK$65.2325
(No interest will be paid in cash except that interest will be paid in cash for each day for which the maturity date is postponed because it falls on a non-business day.)
Further illustrations on return by reference to different assumed closing prices of the Linked Stock
| Assumed closing price on fixing date (HK$) | % change in stock price (between closing price on fixing date and strike price of HK$65.2325) | Return on maturity date | Profit / Loss (% p.a.) |
|---|---|---|---|
| 69.00 | +5.78% | HK$130,465.00 | HK$1,255.07 (+9.33%) |
| 67.00 | +2.71% | HK$130,465.00 | HK$1,255.07 (+9.33%) |
| 66.00 | +1.18% | HK$130,465.00 | HK$1,255.07 (+9.33%) |
| 65.00 | -0.36% | 2,000 shares | HK$790.07 (+5.87%) |
| 63.00 | -3.42% | 2,000 shares | -HK$3,209.93 (-23.86%) |
| 57.00 | -12.62% | 2,000 shares | -HK$15,209.93 (-113.07%) |
| 0 | -100.00% | 2,000 shares | -HK$129,209.93 (-960.53%) |
Return Comparison with Time Deposit
| Principal Amount | HK$129,209.93 |
| Interest Rate* (p.a.) | 0.50% p.a. |
| Depositing period | 38 days |
| Interest | HK$129,209.93x 0.50% x 38/365 = HK$67.26 |
* one month time deposit interest rate for same principal amount and deposit period offered by the Bank on 12 October 2004 (up-to-date time deposit rate will be available at the time of application)
For enquiries, please visit any of our branch and sub-branches or call our customer service hotline.
Equity Linked Deposit (ELD) is NOT equivalent to time deposit and is NOT protected deposit under the Deposit Protection Scheme in Hong Kong.
Risk Disclosure Statement
This is a structured product involving derivatives. The investment decision is yours but you should not invest in the "Equity-Linked 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.
