Enhanced Yield Account, Investments, Banking Investments

Investments

Home>Investments>Enhanced Yield Account

Seizing higher return without risking your principal

Investor uses the interest due on his/her investment principal to buy a digital option in the form of European Call or Put*. The return (if any) on the investment will depend on the performance of the underlying foreign exchange rates or chosen commodity price. The principal and investment return (if any) will be paid on maturity.

Advantages of Enhanced Yield Account

An opportunity to earn potentially higher interest than time deposit of the same tenure
100% principal protection
A wide selection of currencies;
Flexible tenures to cater to your specific needs.

Target Investors

Investors in EYA pursue a potentially higher return in exchange for fixed interest income from time deposit and liquidity of savings. However, EYA is a 100% principal protected product if held to maturity. It is recommended to the following investors:

Low risk preference investors who want 100% principal safety.
Willing to purse a higher return with opportunity cost of losing time deposit interest income.
Seeking multiple financial instruments participation such as foreign exchange and commodity market

The following example shows the calculation of the potential investment returns on EYA. The hypothetical Spot Rates, Interest rate and Return shown in the following examples are for illustrative purposes only regarding structure mechanics for calculating the potential return of EYA. The levels / movement / trends shown have no reference to historical data and do not represent actual or future performance:

Example: Call EUR against USD

Investment Currency:	Euro
Principal:	Euro 50,000
Select Underlying Foreign Currency Pair:	EUR/USD
Select Option Type:	Call EUR against USD
Select Tenure:	1 month
Select Strike Price:	EUR/USD: 1.2500
(Assuming the current market for EUR/USD is 1.2300 and investor believes EUR/USD will appreciate to 1.2500 on Expiry Date)
Potential Investment Return (p.a.):	6.50%
Transaction Date:	May 10, 2010
Value Date:	May 12, 2010
Expiry Date:	June 10, 2010
Maturity Date:	June 12, 2010

Scenario 1

Scenario 2

EUR/USD on Expiry Date	1.2400 < Strike Price 1.2500	1.2600 >= Strike Price 1.2500
Investment return upon maturity	0	Euro 270.83 (= Euro 50,000 x 6.50% x 30 / 360)
Principal + Return received upon maturity	Euro 50,000	Euro 50,270.83

Note:

All listed examples do not take tax into consideration. The bank reserves the right to deduct any tax from the investor account(s) according to any Chinese law, and/or any requests from the relevant tax authorities.
All interest rate and return rate listed in the hypothetical example are for illustrations only, and do not represent any of historical, actual and future performance.
EYA returns (if any) would be calculated from Value Date. Day count for GBP return is calculated based on a 365-day year. All other currencies available for EYA are calculated based on a 360-day year.
The Enhanced Yield Account or any part of it hereof shall not be withdrawn before the pre-determined maturity date.

Disclaimers:

Risk Disclosure(For more details, please refer to the Enhanced Yield Account’s "Terms and Conditions")• Investment Risk: Enhanced Yield Account is not a regular time deposit but an investment product with potential risk.• Liquidity Risk: Withdrawal of the Enhanced Yield Account or any part thereof prior to the specified maturity date is not allowed.• Return Risk: As the investment return is linked with the performance of the underlying foreign exchange rate or commodity price, the investor shall be aware of currency fluctuation risks. That is, on expiry date, for call option if market value of the underlying does not equal or exceed the strike price chosen on transaction date; and for put option, if the underlying currency/commodity price is not at or below the strike price, the investor will receive Zero Investment Return for that particular transaction. The investor shall perform his/her own analysis of the fluctuation and volatility of the underlying currency pair.• Foreign Exchange Risk: The investor investing in non-local currency denominated products should be aware of the risk of exchange rate fluctuations that may cause a loss of the principal when converting non-local currency to local currency. Exchange controls imposed by the relevant authorities may also adversely affect the applicable exchange rate and result in loss of principal and return (if any) upon conversion.