DAH SING EQUITY LINKED DEPOSITS


TARGET CUSTOMER
 
Dah Sing Equity Linked Deposits is targeted at customers who are experienced in securities trading and are sophisticated enough to understand and assess their own risk-tolerance levels towards the risk elements arising from entering a fixed deposit which has a return linked to the market price of an equity.

SPECIFICATION OF DAH SING EQUITY LINKED DEPOSIT
   
 

Product Features
 
Basic Concept Dah Sing Equity Linked Deposits is a fixed deposit with a potentially with return. Its payoff is linked to the price of a specific stock measured against a predetermined conversion price on a particular fixing date. This product is different from traditional fixed time term deposits and investors may not receive the deposit amount or cash on the maturity of the deposit. The market value of any shares received when the deposit matures may be worthless.

Deposit Currency :

Hong Kong Dollars
Minimum Deposit Amount :
HK$25,000
Deposit Duration :
Variable, but usually from 28 days to 183 days
Choice of Underlying Stock :
A range of major stocks listed on the Hong Kong Stock Exchange, mainly blue chips
Early Termination / Amendment :
Customers may not terminate or amend the deposit details, within the specified deposit period
Deposit Confirmation : Customers will receive the deposit confirmation on the deposit creation date
Return Determination Return is determined according to the closing and predetermined conversion price of the underlying stock on the fixing date. There are basically two scenarios :

1) If the closing price of the underlying stock is higher than or equal to its predetermined conversion price, the customer will receive the total of deposit principal plus interest**, in cash; or

2) If the closing price of the underlying stock is lower than the predetermined conversion price of the underlying stock, the customer will receive a predetermined number of shares of the underlying stock, based on the predetermined conversion price. The stock quantity received by the customer is calculated based on the predetermined conversion price. The amount of principal deposited and interest payable will not be paid back to the customer in cash.

** interest rate of the deposit is determined by the bank based on prevailing rates of interest, the volatility of the underlying stock, the tenor of the deposit and the predetermined conversion price.

Fees
 
There are no explicit fees under the Equity Linked Deposit, but any fees and charges incurred by the bank, whether to enter into underlying investment or hedging agreements or for operational or administrative purposes and profit margins, if any, are already inherently contained in and subsumed into the calculation of the interest rate and other variables under the Equity Linked Deposit.

In case customers receive shares of the underlying stock, customers have to bear all fees and related charges of the aforesaid shares. All fees and charges incurred from the trading of such shares will also be at the expense of the customers. For fees and charges related to securities trading, please refer to the Service Charges Schedule made available by the Bank.
 
Customer Communication
 
Deposit Confirmation Customers receive a deposit confirmation with details of the Equity Linked Deposit

Note :  
(a) Earnings on the deposit are limited to the predetermined interest payable.
(b) By entering into an Equity Linked Deposit, an investor is exposing himself/herself to market risk, whereby the determination of the value received under the Equity Linked Deposit is related to changes in the price of the underlying stock. Investors are thereby exposed to price volatility in the underlying stock and stock market. Investors may not receive the Deposit Amount or any cash on maturity of the deposit. Any shares that may be received at maturity of the deposit may become worthless.
(c) The Equity Linked Deposit is not a regular fixed time deposit and investors should seek independent legal and financial advice prior to entering into the Equity Linked Deposit.
(d) Investors should refer to the list of available stocks click here (subject to change from time to time) to select an underlying stock for an Equity Linked Deposit.

EXAMPLE FOR ILLUSTRATION PURPOSE
 

 
  On 21 July 2004, a 64-day time deposit was placed with Dah Sing Bank, utilising the shares of Hutchison Whampoa as the underlying stock:
 
Deposit Amount :
HK$48,674.37
Transaction Date :
21/7/2004
Deposit Date :
21/7/2004
No. of days for Interest Calculation :
 64 days
Fixing Date :
21/9/2004
Maturity Date :
23/9/2004
Interest Rate :
9.9375%
Interest Amount :
HK$848.13
Maturity Value :
HK$49,522.50 (if the stock price does not fall below the predetermined conversion price)
Market price of Hutchison on :
HK$53.25
Transaction Date
Predetermined Conversion :
HK$49.5225
Price on Fixing Date
Predetermined number of shares :		 1,000 shares


Different assumed prices on fixing date and the corresponding returns :

Assumed Stock Price on Fixing Date
% Change in stock price (between initial price and price on Fixing Date)
Total Return on Maturity
Market Value of shares on Fixing Date
Net Gain or Loss
(% in p.a.)
Any price > or = $49.5225#
HK$60
12.7%
Cash of HK$49,522.50
HK$60,000
Gain HK$848.13 (+9.9375%)
HK$53
-0.5%
HK$53,000
Gain HK$848.13 (+9.9375%)
HK$52
-2.3%
HK$52,000
Gain HK$848.13 (+9.9375%)
HK$51
-4.2%
HK$51,000
Gain HK$848.13 (+9.9375%)
HK$50
-6.1%
HK$50,000
Gain HK$848.13 (+9.9375%)
Any price < $49.5225*
HK$49
-8.0%
1,000 shares of Hutchison Whampoa
HK$49,000
Gain HK$325.63 (+3.8154%)
HK$48
-9.9%
HK$48,000
Loss HK$674.37
(-7.9015%)
HK$47
-11.7%
HK$47,000
Loss HK$1,674.37
(-19.6184%)
HK$0
-100%
HK$0
Loss HK$48,674.37
(-100%)

The above example and figures are for illustrative purpose only and not indicative of future performance.

A comparison of an Equity Linked Deposit and a Regular Fixed Deposit :

 
Regular Fixed Deposit
(As of 17 November, 2004)
Deposit Amount
HK$48,674.37
Deposit Rate
0.125% p.a.^
Deposit Tenor
64 days
Total Interest Earned
HK$10.67
Extra Interest Earned
---
Additional Deposit Rate
---

^ For current fixed deposit interest rates, the rate will be available at the time of application.
# Whenever the price of the underlying stock on a fixing date is equal to or greater than the predetermined conversion price, the return at maturity is fixed at HK$49,522.50 (i.e. principal plus interest amount).
* Investors will not receive the interest payment in cash and may incur a loss, if the stock price on a fixing date falls below the predetermined conversion price; investors may lose all of the principal amount of the deposit if the price on a fixing date of the underlying shares fall to zero and the shares are liquidated in the market by selling the shares received at maturity.


This deposit is not a regular fixed deposit. By entering into this deposit, the investor is exposed to price volatility in the underlying stock and stock market, and may not receive the deposit amount or any cash back at maturity of the deposit. Investors should seek independent professional legal and financial advice if they do not understand the risks inherent with this product. Any promotional materials are for information only and do not represent the Bank's recommendation.
 
For more information, please call 2828 8000