RISK DISCLOSURE STATEMENTS

 

RISK OF INVESTMENT

 

Investment involves risk, and the offering document should be read for further details.

 

(Where past performance is quoted) the past performance figures shown are not indicative of future performance.

 

EQUITY-LINKED DEPOSITS

 

WMC-13 (O) (8-2008) (e)

The risk of loss in a deposit may be substantial in certain circumstances. The interest which may become payable on a deposit is generally higher than the interest on an ordinary time deposit. However, this carries with it equity risk. You accept a legal obligation to take the underlying shares at the pre-agreed Conversion Price instead of receiving the principal of the deposit, if the price of the underlying shares falls below the Conversion Price. You will therefore receive shares that have fallen in value. You will lose the entire deposit if the underlying shares become worthless such as in the case of a liquidation or dissolution. The amount of gain is limited to the pre-determined Interest Rate no matter how high the price of the underlying shares has increased when compared to the pre-agreed Conversion Price.  Equity Linked Deposits are not the same as, and should not be treated as a substitute for, normal fixed time deposits. 

 

CURRENCY-LINKED DEPOSITS

 

The net return on a deposit will depend on the market conditions at the fixing time and at maturity.  You must be prepared to risk any loss as a result of depreciation in the value of the currency which may be paid to you. You may suffer a loss instead of making a gain. 

 

RISK OF SECURITIES TRADING

 

The prices of securities fluctuate, sometimes dramatically.  The price of a security may move up or down, and may become valueless.  It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities.

 

RISK OF TRADING OPTIONS

 

The risk of loss in trading options is substantial. In some circumstances, you may sustain losses in excess of your initial margin funds.  Where applicable, placing contingent orders, such as "stop-loss" or "stop-limit" orders, will not necessarily avoid loss. Market conditions may make it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the required funds are not provided within the prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in your account. You should therefore study and understand options before you trade and carefully consider whether such trading is suitable in the light of your own financial position and investment objectives.  If you trade options you should inform yourself of exercise and expiration procedures and your rights and obligations upon exercise or expiry.

 

RISK OF LEVERAGED FOREIGN EXCHANGE TRADING

 

The risk of loss in leveraged foreign exchange trading can be substantial. You may sustain losses in excess of your initial margin funds. Where applicable placing contingent orders, such as "stop-loss" or "stop-limit" orders, will not necessarily limit losses to the intended amounts. Market conditions may make it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the required funds are not provided within the prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in your account. You should therefore carefully consider whether such trading is suitable in light of your own financial position and investment objectives.

 

RISK OF TRADING GROWTH ENTERPRISE MARKET STOCKS

 

Growth Enterprise Market (GEM) stocks involve a high investment risk. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability.  GEM stocks may be very volatile and illiquid.

 

You should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

 

Current information on GEM stocks may only be found on the internet website operated by The Stock Exchange of Hong Kong Limited. GEM Companies are usually not required to issue paid announcements in gazetted newspapers.

 

You should seek independent professional advice if you are uncertain of or have not understood any aspect of this risk disclosure statement or the nature and risks involved in trading of GEM stocks.

 

RISK OF FUNDS AND UNIT TRUSTS

 

Investment in funds or unit trusts is different to placing moneys on deposit with a bank.  The funds or unit trusts are not deposits or other obligations of, or guaranteed by, our affiliates or us.  The fund company or unit trust manager is under no obligation to redeem shares in any fund or unit trust at the price at which they were issued.  Although we may not charge a fee for providing services relating to funds or unit trusts, we will normally be paid a commission or rebate by the fund or unit trust manager for arranging transactions involving funds or unit trusts.

Since some markets in which some of the funds or unit trusts invest may be subject to a higher than usual risk of political or economic instability, the assets of and income from such funds or unit trusts may be affected unfavorably by fluctuations in currency rates, exchange control and fiscal regulations and as a result, the shares of these funds and unit trusts may be subject to substantial price volatility.  Some markets may not be subject to accounting, auditing and financial reporting standards and practices comparable to those applicable in more advanced countries, and there may be less government supervision, legal regulation and less well defined tax laws and procedures than in countries with more advanced securities markets.

 

Certain funds or unit trusts may invest in higher yielding securities rated lower than investment grade.  Below investment grade securities such as, for example, high yield debt securities, may be considered speculative and can include securities that are unrated or in default.  As a result, investment in these funds or unit trusts are accompanied by a higher degree of credit risk than is present in investment in higher rated, lower yielding securities.

 

You should carefully consider prior to investing in funds or unit trusts, (a) the possible tax consequences, (b) the legal requirements and (c) any foreign exchange control requirements which you might encounter under the laws of the countries of your incorporation, citizenship, residence or domicile and which might be relevant to the purchase, sale, subscription, holding, conversion or disposal of the shares in funds or unit trusts.

 

The market for technology or technology-related funds or unit trusts can be highly volatile and in many cases their prices may reflect market speculation rather than the underlying economic value of such funds or unit trusts.

 

Certain capital guaranteed/capital preserved funds or unit trusts generally carry some terms and conditions, and redemption of shares in the funds or unit trusts prior to fulfilling all the terms and conditions specified in the offering documents or prospectus will be subject to market fluctuations or a redemption fee.  Capital guaranteed/capital preserved funds or unit trusts are not guaranteed by us or our affiliates.

 

RISK OF PROVIDING AN AUTHORITY TO REPLEDGE YOUR SECURITIES COLLATERAL ETC.

 

There is risk if you provide us with an authority that allows us to apply your securities or securities collateral pursuant to a securities borrowing and lending agreement, repledge your securities collateral for financial accommodation or deposit your securities collateral as collateral for the discharge and satisfaction of our settlement obligations and liabilities.

 

If your securities or securities collateral are received or held by us in Hong Kong, the above arrangement is allowed only if you consent in writing.  Moreover, unless you are a professional investor, your authority must specify the person for which it is current and be limited to not more than 12 months.  If you are a professional investor, these restrictions do not apply.

 

Additionally, your authority may be deemed to be renewed (i.e. without your written consent) if we issue you a reminder at least 14 days prior to the expiry of the authority, and you do not object to such deemed renewal before the expiry date of your then existing authority.

 

You are not required by any law to sign these authorities.  But an authority may be required by us, for example, to allow your securities or securities collateral to be lent to or deposited as collateral with third parties.  We should explain to you the purposes for which one of these authorities is to be used.

 

If you sign one of these authorities and your securities or securities collateral are lent to or deposited with third parties, those third parties will have a lien or charge on your securities or securities collateral.  Although we are responsible to you for securities or securities collateral lent or deposited under your authority, a default by us could result in the loss of your securities or securities collateral.

 

A cash account not involving securities borrowing and lending is available from us.  If you do not require margin facilities or do not wish your securities or securities collateral to be lent or pledged, do not sign the above authorities and ask to open this type of cash account.

 

RISK OF YOUR ASSETS RECEIVED OR HELD OUTSIDE HONG KONG

 

Your assets received or held by us or our nominee outside Hong Kong are subject to the applicable laws and regulations of the relevant overseas jurisdiction which may be different from the Securities and Futures Ordinance (Cap 571) and the rules made thereunder. Consequently, your asset may not enjoy the same protection as that conferred on customer asset received or held in Hong Kong.

 

RISK OF PROVIDING AN AUTHORITY TO HOLD MAIL OR TO DIRECT MAIL TO THIRD PARTIES

 

You understand that if you provide us with an authority to hold mail or to direct mail to third parties, it is important for you to promptly collect in person all contract notes and statements of your account and review them in detail to ensure that any anomalies or mistakes can be detected in a timely fashion.

               

RISK OF TRADING NASDAQ-AMEX SECURITIES AT THE STOCK EXCHANGE OF HONG KONG LIMITED

 

The securities under the Nasdaq-Amex Pilot Program (PP) are aimed at sophisticated investors.  You should consult us and become familiarised with the PP before trading in the PP securities.  You should be aware that the PP securities are not regulated as a primary or secondary listing on the Main Board or the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited.

 

RISK OF CUSTODY

 

There may be risks in leaving securities / units in our safekeeping.  For example, if we are holding your securities/ units and we become insolvent, you may experience significant delay in recovering the securities/ units. 

 

GENERAL

 

Transactions are "non transferable" and it may be impossible for you to close out or liquidate them.

 

Any recommendation or information given by us to you are for your reference only. Reliance on such recommendation or information is at your own risk. We make no representations regarding the performance of your investment.

 

You confirm to us that you have sufficient knowledge and experience to be able to evaluate the merits and risks of entering into each transaction, are acting in reliance solely upon your own judgment or upon professional advice obtained independently of us as to those merits and risks (including, where relevant, the tax and accounting treatment of each transaction) and are not relying upon our views or advice.

 

We may have existing or future commercial or banking relationships with the issuer of the underlying shares or its affiliates, and will pursue actions which we deem appropriate to protect our interests, without any obligation to disclose or account to you, and regardless of whether any such action might adversely affect you.

 

You should not deal in a transaction unless you understand the nature of the transaction you are entering into and the extent of your exposure to risk. You should carefully consider whether the transaction is suitable for you in the light of your circumstances and financial position.  If you have any concerns about any transaction you should consult your professional advisers.