Paper Gold

Investment involves risks. The below risk disclosure provides the key risks, but cannot disclose all the risks involved or all product information. Before making any investment decision, please read in detail and understand the Principal Brochure and Product Key Facts Statement of the Hang Seng Statement Gold Scheme (the “Scheme”).

• Not principal protected. Your investments in the Scheme are not principal protected. In the worst case scenario, you may lose your entire investment amount.
• Not a bank deposit. Your investments in the Scheme are not and are not equivalent to a bank deposit.
• Not protected deposit. Your investments in the Scheme are not protected deposits and are not protected by the Deposit Protection Scheme in Hong Kong.
• Not an interest-bearing account. The account through which the investments in the Scheme are conducted is not an interest-bearing account with neither yield nor interest provided.
• Volatility of price. The unit prices of the Scheme are calculated with reference to the price of the Reference Asset (and are subject to the Bank’s profit margins). You should recognize that the unit prices of the Scheme are volatile due to the price changes in the Reference Asset resulted from the demand and supply of the Reference Asset and may go up and down. You will bear the potential losses due to the fluctuation of the unit price of the Scheme. The price fluctuation may go beyond your expectation and the losses may reduce your capital invested and earnings (if any) substantially.
• System unavailability. The Bank takes all reasonable measures to monitor and oversee the availability of the systems and has contingency plans in place to mitigate the risk of system unavailability, however, there remains a risk that pricing and trading may be delayed or interrupted due to unforeseen issues in systems.
• No physical delivery of Gold. The Scheme does not involve physical delivery of Gold. You do not have any rights, ownership and possession of any physical Gold in the Scheme. The allocation of units in the Scheme is notional and is for the sole purpose of determining the cash value of your investment in the Scheme. The unit prices of the Scheme are calculated with reference to the prices of the Reference Asset (and are subject to the Bank’s profit margins).
• Not the same as investment in Gold. Investment in the Scheme is not the same as investing in Gold. Price changes in Gold might not reflect in price changes of the Scheme due to the pricing mechanism set out in the paragraph “Pricing Mechanism” under "Key Features of the Scheme" on page 3 of this Product Key Facts Statement.
• Market risk. The price of the Reference Asset may go up and down due to movement in macroeconomic factors which include but not limited to interest rate, inflation, economic growth and geopolitical tension. The unit prices of the Scheme are calculated with reference to the price of the Reference Asset (and are subject to the Bank’s profit margins).
• Investment risk. Investment involves risks and the prices of the Reference Asset may fluctuate. The value of your investments in the Scheme may move up or down, sometimes dramatically, and may even become valueless. In the worst case scenario, you may lose your entire investment amount.
• Credit risk of the Bank. Your investment in the Scheme is subject to credit risk of the Bank. Material adverse changes in the financial condition of the Bank may impair or affect the ability of the Bank to meet its obligations under the Scheme.
• Insolvency risk of the Bank. There is no assurance of protection against a default by the Bank in respect of its payment obligations. If you invest in the Scheme, you are relying upon the creditworthiness of the Bank and of no other person. If the Bank becomes insolvent or default on its obligations under the Scheme, you can only claim as the Bank’s unsecured creditor. In the worst case scenario, you may lose your entire investment amount.
• Termination risk. The Bank has the right to terminate the Scheme and/or the account through which your investments in the Scheme are conducted at any time in the circumstances as described under the applicable terms and conditions of the Scheme. These include illegality, pursuant to regulatory requirement, breach of obligations and zero balance under the Scheme and/or the account through which your investments in the Scheme are conducted. Under other circumstances, the Bank may also terminate the Scheme and/or the account through which your investments in the Scheme are conducted by giving at least 90 days’ (or such other notice period pursuant to the relevant regulatory requirement) prior notice in writing to you. In such scenarios, if you could not sell your units in the Scheme back to the Bank before the termination date, the amount payable by the Bank back to you on such termination will be the prevailing price of your units in the Scheme as quoted by the Bank at the date of termination, which may be substantially less than your investments in the Scheme.
• Risk relating to the Bank’s hedging activities. The Bank may enter into hedging transactions, which typically involve the establishment of long and/or short positions in the Reference Asset, with its respective hedging counterparties in the market. It is possible that these activities could adversely affect the prices of the Reference Asset if the size of hedging transaction is substantial. As such the prices of units in the Scheme calculated with reference to prices of the Reference Asset will be affected as well. The value of your investments in the Scheme may move up and down.
• Set-off right by the Bank. The Bank has the right to combine or consolidate any balances standing to the credit of your accounts (including the units of the Scheme standing to the credit of the account) with the Bank to set-off against any indebtedness owed by you to the Bank. Under the applicable terms and conditions of the Scheme, in addition to any lien that the Bank may be entitled, the Bank may, at any time and without prior notice, apply the value of the units of the Scheme standing to the credit of the account towards discharge of any of your liabilities owed to the Bank. Copies of the applicable terms and conditions of the Scheme are available at the Bank’s branches in Hong Kong.
• Conflicts of interest. Potential and actual conflicts of interest may arise from the different roles played by the Bank and the Bank’s subsidiaries and affiliates in connection with the Scheme. Although the Bank’s economic interests in each role may be adverse to your interests in the Scheme, the Bank sets the necessary regulatory information barriers among its different business areas as well as formulates policies and procedures for minimizing and managing such conflicts of interest, so as to comply with applicable laws and regulations, and to ensure the Bank’s transactions or dealings will be transacted at arm’s length.
• Force majeure events. The Bank is not liable for any failure or delay to meet its obligations due to any causes beyond its control which shall include local or international happenings such as Acts of God, Government act, flood, fire, civil commotion, strike, war or any other causes beyond the reasonable control of the Bank, mechanical failure, power failure, malfunction, breakdown, interruption or inadequacy of equipment or installation or other cause which results or is likely to result in the erratic behavior of Gold prices, the closure of the markets or exchanges of Gold or any other cause affecting the operation of the Scheme.