Investment Risk Disclosure Statement

Structured Products

Risks of Structured Products

Issuer Default Risk In the event that a structured product issuer becomes insolvent and fails to fulfill its obligations regarding the issued securities, the investor is considered only as an unsecured creditor and has no priority claim to any of the issuer's assets. Therefore, you must pay particular attention to the financial strength and creditworthiness of the structured product issuer.

Unsecured Product Risk Unsecured structured products are not asset-backed. Should the issuer go bankrupt, you may lose your entire investment. To determine whether a product is unsecured, you must carefully read the listing documents.

Leverage Risk Structured products such as derivative warrants and Callable Bull/Bear Contracts (CBBCs) are leveraged products. Their value can change rapidly relative to the leverage ratio of the underlying asset. You should be aware that the value of structured products can fall to zero, resulting in the total loss of your initial investment capital.

Expiry Considerations Structured products have an expiry date, after which they become worthless. You must monitor the expiry time of the product to ensure that the remaining valid period of the chosen product aligns with your trading strategy.

Exceptional Price Movements The price of a structured product may deviate from its theoretical price due to external factors (such as market supply and demand). Therefore, the actual transaction price may be higher or lower than the theoretical price.

Foreign Exchange Risk If the underlying assets of the structured products you trade are not denominated in Hong Kong dollars, you will also face foreign exchange risk. Fluctuations in currency exchange rates can negatively impact the value of the underlying assets, consequently affecting the price of the structured product.

Liquidity Risk The Stock Exchange requires all structured product issuers to appoint a liquidity provider for each individual product. The duty of the liquidity provider is to provide two-way quotes to facilitate trading. If a liquidity provider defaults or ceases to fulfill its duties, you may be unable to trade the relevant product until a new liquidity provider is appointed.