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FAQs: Investments and Wealth Management

Frequently asked questions related to HSBC China’s Investment and Wealth Management products and services.

Structured Investment Product

What is a Structured Investment product? How does it work?

An HSBC Structured Investment product is linked to the performance of the underlying asset(s). The potential return depends on the performance of the underlying asset(s), but does not 100% reflect or represent the actual performance of the underlying assets. Under Structured Investment, the capital protection (or partial capital protection) and the fixed income (if applicable) will come from the bank's investment in fixed-income product(s), while the potential return (if any) will come from the bank's investment in derivative product(s). Also, the actual investment proportion is decided by the bank according to comprehensive factors such as product type, investment tenor, investment currency and market condition on trade day. Please refer to the product subscription package for more detailed information.

How is the return of a Structured Investment calculated?

A Structured Investment product is linked to the performance of the relevant underlying assets. The potential return depends on the product structure and the performance of the underlying assets, but does not 100% reflect or represent the actual performance of the underlying assets. Please refer to the product subscription package for detailed information.

What are the underlying assets of a Structured Investment?

A Structured Investment is usually linked to the performance of the relevant underlying assets such as securities, exchange rate, indices and funds.  The potential return depends on the product structure and the performance of the underlying assets, but does not 100% reflect or represent the actual performance of the underlying assets. Please refer to the product subscription package for detailed information.

What is the minimum investment tenor for Structured Investment products? Is there any lock-up period?

The investment tenor and product features for Structured Investment vary depending on the products. Please refer to the product subscription package for detailed information.

What is the minium amount for Structured Investment product?

The minimum investment amount for Structured Investment is determined by specific Product Risk Level:

For product with Risk Level of One and Two, the minimum amount shall no be less than RMB50,000; For Risk Level of Three and Four, the minimum amount shall be no less than RMB100,000;  For Risk Level of Five,  the minimum amount shall be no less than RMB200,000. We reserve the right to make changes to minimum investment amount from time to time under the premise of complying with laws and regulations. Different structured products have different minimum investment amounts, please refer to the product sales package for more information. 

What are the risks of Structured Investment products?

There are different risks under different structured invesments. Generally, the risks are principal risk, return risk, early redemption risk, market risk, foreign exchange risk, re-investment risk, credit risk, liquidity risk, non-acceptance risk, inflation risk, early termination risk, adjustment /substitution risk, tax risk and etc.

Is there a subscription fee for Structured Investment products?

It depends on the stipulation of the product contract.

How do investors get to know the risk level of products?

It will be clearly stated in product brochures and product sales documents.

Which investors are suitable for Structured Investment products?

Normally, Structured Investment products are offered to Chinese residents and qualified overseas individuals. Chinese residents refer to Chinese citizens holding the P.R.C resident identity card, military ID or armed police ID. Overseas individuals refer to foreign passport holders, Hong Kong, Macau, Taiwan permanent residents as well as Chinese citizens with permanent residence permit overseas, who must also satisfy the following requirements: 1) having been working or residing in Mainland China continuously for one year or above; 2) the fund used to invest in the product is from their income in Mainland China; 3) not overseas students or medical patients in Mainland China who come from foreign countries, Hong Kong, Macau or Taiwan; 4) not expatriate staff of foreign embassy/consulate in China or their family members; 5) not Canadian/US citizen or residents. For detailed requirements please refer to the product sales package.

How does the bank calculate the redemption amount of Structured Investment product(s)?

HSBC China may allow monthly early redemption at market value of the product(s) for the majority of our Structured Investment products. However, investors should note that the principal protection scheme is based on the precondition that you hold the product(s) to maturity and therefore principal protection will not be applied in the case of redemption. The portfolio of structured investment products consists of fixed income products and derivatives, so the redemption amount will depend on their market value. For example, a customer invested in a two-year product requests redemption after half a year. The bank needs to calculate the cost of exiting the fixed income investment and to evaluate the market value of the derivatives. The calculation of the redemption amount is subject to many factors, including the fluctuations of interest rate, the performance of underlying asset(s), market conditions, liquidity and the cost, expense(s), liability(ies) and loss caused by the bank's termination of hedge plan or other source of financing. The bank will take into consideration all the possible factors when calculating the market value of the redemption. Because the principal protection scheme is not applicable to the case of redemption, your redemption amount may be less than your initial investment amount and you may even suffer a great significant loss when you request redemption.

Overseas Investment Plan

An investment product issued by HSBC China, and the funds collected thereunder are invested into the relevant overseas fund or bond in the name of HSBC China.

Overseas Investment Plan - Offshore Fund

What is a fund?

A fund is a form of collective investment plan managed by professional fund managers. Subject to an agreed investment scope and strategy, the funds collected from a mass of investors will be invested into stocks, bonds and money market instruments etc.

When investors subscribe for funds, they will be given a certain number of fund units or shares whose value will change with the fluctuation of the net asset value of the funds. The price of each unit or share reflects the net asset value plus or minus any disclosed charges.

There are many types of funds and their risk characteristics differ greatly from fund to fund. The main reason is that different assets invested under the relevant funds have different risk profiles.

How can I benefit from fund investment?

Capital Gain Potential: You can benefit from capital appreciation if fund prices move up.

Dividend income (if applicable): Dividend distributions may be available to investors of funds. Dividends may be distributed on a monthly, quarterly or annually basis.

What are Open-Ended Funds and Closed-Ended Funds?

Funds could be divided into Open-Ended Funds and Closed-End Funds depending on their different operational model.

Closed-End Funds have a fixed number of fund units during the tenor specified in the fund contract. Fund units may be traded on lawfully organized stock exchanges, but fund unit holders are not allowed to apply for early redemption of their fund units.

Open-Ended Funds do not have a fixed number of fund units. Units can be subscribed and redeemed at the time and venue agreed in the fund contract.

How can I subscribe/redeem products via HSBC?

You can apply for product subscriptions/redemptions and go through the subscription/redemption procedures (including but not limited to reading and signing the various documents required for subscription/redemption) by personally visiting our branch office before 2:30 PM Beijing Time on each working day.

How can I invest in an Overseas Investment Plan Offshore Fund via HSBC Personal Internet Banking?

Currently, you can use our online trading service on HSBC Personal Internet Banking to trade an Overseas Investment Plan Offshore Fund by logging on Personal Internet Banking from 3:00AM to 9:00PM Beijing Time every day. At other times, investment transactions (including subscription, redemption, switching and canceling orders) might not be conducted successfully due to system maintainance. For more details, please visit a local branch or call our customer service hotline on 400-820-8878 (Please dial China country code +86 if you are calling from overseas).

If my redemption application is successfully submitted, when can I receive the redemption?

As far as Overseas Investment Plan – Offshore Fund is concerned, if the relevant offshore fund management company accepts the redemption request of the Bank, the Bank will proceed the Investment Plan Redemption amount to you after the Offshore Fund Redemption amount from the offshore fund management company is received. The Bank usually makes the payment to the investor within 10 working days after receiving the redemption application from the investor under the Investment Plan.

What are the main risks of investing in fund products?

The main risks of investment in an Overseas Investment Plan Offshore Fund include return risk, principal risk, credit risk, offshore fund risk, liquidity risk, foreign exchange risk etc.

Does the Overseas Investment Plan – Offshore Fund investment entail foreign exchange risk?

Foreign Exchange risk must be considered if you intend to invest in the Overseas Investment Plan – Offshore Fund. If the investment currency is not your base currency and you choose to convert other currencies to the investment currency of the Investment Plan in order to subscribe the Investment Plan, and/or you need to convert the redemption proceeds (if any) back to your base currency, your actual investment return may be affected negatively or positively due to foreign exchange fluctuations. Investors should be aware of the foreign exchange risk associated with the Investment Plan. Investment return could be affected negatively or positively due to exchange fluctuation. In the worst scenario, investors may obtain no return and lose the entire principal due to foreign exchange fluctuations.

What are the key charges for investment in Overseas Investment Plan – Offshore Fund products?

The key charges directly borne by investors include: subscription fee, redemption fee, switching fee. For actual charges and fees please refer to product brochure.

How can I get access to these fees details?

You can get access to this information by logging on our website, or contacting your Relationship Officer/Manager or calling our customer service hotline on 400-820-8878 (Please dial China country code +86 if you are calling from overseas).

Will the bank provide me with regular updates of overseas fund investment information?

HSBC will provide you with fund product and transaction information via the channels and methods as below:

  • Product advice
  • Composite statement
  • Offshore Fund Net Asset Value and Monthly Factsheet

You can also contact your relationship manager or call the bank to check the performance of the Investment Plan on +86 400-820-8878. If you have registered for Online Banking, you can also log on to check the Investment Plan you hold.

Which investors are suitable for investment in Overseas Investment Plan – Offshore Fund?

This Investment Plan is suitable for investors who have securities or fund investment experience and risk level corresponding with the relevant Overseas Investment Plan. (please refer to the HSBC Offshore Fund Prospectus for details about risk levels and suitable customers). Please consult our staff for suitability for specific products. 

Overseas Investment Plan – Overseas Bond

What is a Bond?

A bond is a debt instrument issued by a national or local government, financial organization or enterprise for the purpose of raising capital by directly borrowing money from the public, under which a promise is made to repay principal together with interest (coupon) at agreed terms and conditions. The relationship between the bond holder and bond issuer is that of creditor and debtor. The bond holder is the creditor, while the bond issuer is the debtor. Bonds are used for raising funds within a certain period up to fixed maturity date. Bond issuers are obliged to pay regular coupons before maturity date, and to refund the principal amount to bond holders upon maturity.

What is the relationship between bond price and interest rate?

A rise in market interest rates will reduce bond price, or vice versa.

How could I earn profit through bond investment?

1) Regular interest income

Some bonds deliver stable and predictable coupons as streams of income. Bonds also offer predictable repayment of principal at maturity.

2) Yield Enhancement

If the bond price could increase, you may earn the potential profit from the increase of capital value.

What kinds of bonds are made available by HSBC China?

HSBC China offers the Overseas Investment Plan - Overseas Bond under the qualified domestic institutional investor (“QDII”) scheme, under which we make several overseas bonds available for selection by investors. The funds raised from investors under the Investment Plan will be invested in the name of HSBC China into overseas bonds according to investors' application and choice. HSBC China offers a variety of bonds of different or equivalent ratings, including government bonds and corporate bonds and several investment currencies are also available for your selection.

What is the minimum amount for new subscription of Overseas Investment Plan - Overseas Bond and top-up?

HSBC China offers the Overseas Investment Plan - Overseas Bond under the qualified domestic institutional investor ("QDII") scheme. Under which, we make several overseas bonds available for selection by investors. The funds raised from investors under the Investment Plan will be invested in the name of HSBC China into overseas bonds according to investors’ application and choice. The minimum amount for new and incremental subscription of the Investment Plan varies from one product to another.

For details, please log on our website, or contact your Relationship Officer/Manager or call our customer service hotline on 400-820-8878 (Please dial China country code +86 if you are calling from overseas). 

Is there a requirement for minimum investment tenor or lock-up period?

Subject to the related restriction or limitation stated in the Product Subscription Document and the Overseas Bond Basic Information, investors may apply for redemption of part or all of the subscribed Investment Plan units and go through the redemption procedures (including without limitation reading and signing various documents required for the redemption) by visiting the Bank in person before 2:30PM Beijing Time of a Business Day (“Redemption Trade Date”) starting from the fourth Business Day after successful subscription of the Investment Plan.

On the Redemption Trade Date of the Investment Plan, the bank will sell on a real-time basis the corresponding number of overseas bonds held by it to the Overseas Counterparty according to total nominal amount of the redemption applications received by it on Redemption Trade Date under the Investment Plan. 

Please note Overseas Counterparty may reject the selling of related Overseas Bonds by the Bank for some reason (for example, there are unusual elements in the market). Under such circumstance, investors could not redeem related Investment Plan.

Is it capital protected?

This Investment Plan is a non-capital protected investment product with floating return, involving high investment risks. Neither investment capital nor return is guaranteed. You may suffer significant loss of capital. In the worst scenario, your redemption proceeds at the time of redemption could be zero, i.e. you may lose all the capital. You should fully understand the investment risk and act prudently in making the investment decision. This Investment Plan has significant differences from traditional deposits and involves investment risk. 

Can I invest through HSBC China Personal Internet Banking?

Currently, we don’t offer an online trading service. Investors may apply for this Investment Plan and go through the subscription procedures by visiting the bank in person before 2:50PM Beijing Time on each Business Day. 

What are the risks of investing in Overseas Investment Plan-Overseas Bond)?

  • Return Risk: The Bank does not provide any guarantee or promise on the return of the Investment Plan. The Investment Plan does not guarantee a return higher than other investment or deposit products and the return of the Investment Plan may be zero. 
  • Principal Risk: Normally the overseas bond issuer will pay the face value of the overseas bond upon its maturity, however, due to the potential risks associated with the relevant overseas bond (including but not limited to market risk, credit risk etc), the Investment Plan does not provide any capital protection. Investors may suffer capital loss at the time of redemption, and the redemption proceeds may even be zero (which means100% capital loss). 
  • Credit Risk: Investors should bear the credit risk associated with the Investment Plan, which involves the credit risk of the bank, overseas bond issuer and guarantor (if applicable), custodian bank, and overseas custodian bank and overseas counterparty. 
  • Overseas Investment Risk: Notwithstanding the fact that investors do not directly invest in or hold overseas bonds issued by overseas issuers, but rather subscribe to the Investment Plan issued by the bank, all the risks associated with the bank's investment in the overseas bonds will be passed onto investors as the overseas bonds issued by overseas issuers are the bank's investment targets under this Investment Plan. 
  • Foreign Exchange Risk: If the currency of the Investment Plan is not your base currency and you choose to convert other currencies in order to subscribe the Investment Plan, and/or you choose to convert the redemption proceeds (if any) back to your base currency, your actual investment result may be affected negatively or positively due to exchange fluctuations. Investors should be aware of the Foreign Exchange Risk associated with the Investment Plan. Investment result could be affected negatively or positively due to exchange fluctuation. In the worst scenario, investors may obtain no return and lose the entire capital amount due to exchange fluctuations .For details, please refer to product brochure.

What are general risks associated with bonds?

Different bonds are subject to different level of risks depending on factors such as the issuer's credit status, bond rating, tenor and investment currency. Risk level of bonds may be subject to adjustment (including upward adjustment) by virtue of change(s) of the risk factors.

What will be the charges for Overseas Investment Plan Overseas bond?

Main charges of  Overseas Investment Plan - Overseas Bond  include: Subscription fee and redemption fee. For actual charges and fees please refer to product sales.

Will the Bank provide me with regular update of product information in respect of my investment holdings?

The Bank will disclose product and transaction information via channels below:  

  • Product Advice
  • Composite Statement

You can also contact your relationship manager or call the bank to check the performance of the Investment Plan on 400-820-8878 (Please dial China country code +86 if you are calling from overseas). If you have registered for Personal Internet Banking, you can also log on to check the Investment Plan you hold. 

Which investors are suitable for Overseas Investment Plan - Overseas Bond?

Investors whose specific attitude toward investment risk matches the risk level of the Offshore Bond(s) under the Investment Plan and are qualified as suitable customers as listed under our product brochure (Please refer to bond brochure provided by the Bank to understand the risk level of the relevant Offshore Bonds and their respective suitable customer type).

Local Mutual Fund /Hong Kong Mutual Recognition of Fund (3rd party distribution)

How can I make a subscription/redemption through HSBC China?

Investors may apply for subscription/redemption and go through the subscription/redemption procedures (including but not limited to reading and signing various documents required for the redemption) by visiting a local branch in person before 2:30PM Beijing Time on a Business Day.

If my redemption application is successfully submitted, when will I receive the proceeds?

As far as local mutual fund is concerned, if the relevant local fund management company accepts the redemption request, the bank will pay the redemption amount to you after the corresponding funds are received from the fund management company. The bank usually makes the payment to the investor within three business days after receiving the local mutual fund redemption application from investor.

As far as Hong Kong Mutual Recognition of Fund is concerned, if the relevant offshore fund management company accepts the redemption request of the bank, the bank will pay the redemption amount to you after it receives the offshore fund redemption amount. The bank usually makes the payment to investor within five (in RMB)/ six business days (in USD) after receiving the redemption application from the investor.

What are the main risks of investing in fund products?

Customers face various risks during their investment in local mutual funds. These risks include but are not limited to market risk, management risk, technical risk and compliance risk in respect of the fund itself.

Does the fund investment entail foreign exchange risk?

Foreign exchange risk must be considered if you intend to invest in Hong Kong Mutual Recognition of Fund. If the investment currency is not your base currency and you choose to convert other currencies to the investment currency in order to subscribe the Product, and/or you need to convert the redemption proceeds (if any) back to your base currency, your actual investment return may be affected negatively or positively due to exchange fluctuations. Investors should be aware of the Foreign Exchange Risk associated with the Product. Investment return could be affected negatively or positively due to exchange fluctuation. In the worst scenario, investors may obtain no return and lose the entire principle due to exchange fluctuations. 

What are the key charges for mutual fund products?

The key charges usually directly borne by investors include: subscription fee, redemption fee, switching fee and etc. Those charges created in the fund management like fund management fee, custodian fee, information disclosure fee and etc. are borne by fund assets. 

How can I get access to these fees details?

You can get access to such information by logging on our website, or contacting your Relationship Officer/Manager or calling our Customer service hotline: 400-820-8828 (Premier customer) / 400-820-8878 (Advance customer) (Please dial China country code +86 if you are calling from overseas).

Will the Bank provide me with regular product information in respect of my investment holdings?

The Bank will disclose product and transaction information via channels below: 

  • Product advice
  • Composite statement
  • Fund Net Asset Value and Monthly Factsheet

You could also contact your relationship manager or call the Bank to check the performance of the product, please call 400-820-8828 (Premier customer) / 400-820-8878 (Advance customer) (Please dial China country code +86 if you are calling from overseas). If you have registered Personal Internet Banking, you could also log on Personal Internet Banking to check the prodcut you hold. 

Which investors are suitable for Local Mutual Fund/ Hong Kong Mutual Recognition of Fund (MRF)?

Investors with related experience on bonds and fonds, and whose specific attitude toward investment risk matches the risk level of the related products under Local Mutual Fund/ Hong Kong Mutual Recognition of Fund.

Other Questions

What is the time value of money and what affects the value of money?

The time value of money is the concept that money today is worth more than the same amount in the future.

As the price of products and services rises, currency purchasing power will decline over time, which leads to inflation. Money value will be affected by the following factors:  

Inflation:

In simple terms, the price of goods and services rise and thus the purchasing power of the currency will continue to decline. This is inflation. 

Fluctuations of interest rates:

When interest rates fall, the interest return on deposits will be reduced. If deposit rates fall below the inflation rate, the savings would lose their value over time in real terms. 

International economic trends: 

The purchasing power of a currency (money value) may be affected by circumstance changes of home country or other countries or regions including political situation, GNP (Gross National Product), stock market indices and etc. Given different factors may affect currency values, financial plans should be developed in order to get a reasonable return on investment and to cater for actual needs and thus to safeguard the future. 

What are the basic rules to making investments?

You first need to understand your financial needs, investment objectives, financial situation and risk appetite. 

Your goals may include the following:  

  • protect your family
  • children's education
  • retirement planning
  • wealth management and growth
  • legacy planning

You should also consider your goals, investment tenor, affordable investment amount and personal investment preferences. 

When should I start financial planning for my future? How should I approach financial planning?

Financial planning is a sound financial management process to develop and achieve personal and family financial goals through investments, asset allocation, risk control, retirement planning etc. Financial planning is not simply saving money or cutting living costs. Reasonable financial planning can help individuals and families set financial goals for different life stages and help them achieve these financial goals through proper investment tools and portfolios; it could contribute to wealth accumulation and growth as well as prepare individuals and families to respond to adverse effects of unexpected events.

There is no set formula for financial planning. It varies by person, circumstance and life stage. You should start your financial planning as early as possible. 

What is Dollar Cost Averaging?

Dollar Cost Averaging is a timed investment strategy in which regular investment is made. In addition to the accumulation of capital, investors also use this approach to overcome the risk of a single investment, eliminating the factor of “timing the market” from the investment decision-making process. The regular investment strategy mitigates the risk of single point investment, so that investors don’t have to "wait" or "guess" the so-called right time. Investors can take action right after investment target, date and amount are decided.

Where can I get more information about investment products?

You may contact your relationship manager or call our hotline at 400-820-8828 (for Premier customers) or 400-820- 8878 (for Advance customers) (Please dial China country code +86 if you are calling from overseas) at your convenience.

For more information, please refer to the Frequently asked questions page.

Disclaimer

These FAQs are intended to provide an overview of the information on issues related to financial products or services, or regulatory requirements faced when undertaking financial activity in mainland China. Due to the diversity and  complexity of financial products/services and local regulatory environment, these FAQs can only provide an outline of the issues. The information is provided for your reference only, and shall not be construed as legal, financial or any other professional advice. HSBC makes no guarantee, representation or warranty and accepts no responsibility for the accuracy updatedness and/or completeness of the information.

Latest update in Nov. 2016