videopokersoftwareformac| So hot! "The appointment is scheduled until next week"! Some interest rates are as high as 16%. What are the risks?

Source: Zhongxin longitude and latitude

Mainland residents are still hot to open accounts in Hong Kong. Zhongxin Jingwei recently visited a number of banks in Hong Kong and learned that in response to the substantial increaseVideopokersoftwareformacOf the mainland customers, many banks implement the online booking system.

An account manager of Nanyang Commercial Bank said that the bank's appointment has been scheduled until next week, which will take about four working days. Bank of China (Hong Kong) (BOC Hong Kong) indicated at 10:00 that the quota for opening an account was full. The account manager suggested to make an online reservation in advance and said that some customers usually queued up one hour before opening the door.

▲ Bank of China Hong Kong shows that the queuing quota for opening an account is full at 10:00, photo by Luo Kun of Zhongxin Jingwei

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There are interest rate concessions for investors.

Since 2023, against the backdrop of interest rate cuts in the mainland, the relatively higher interest rates on bank deposits in Hong Kong have attracted the attention of "deposit special forces".

On the 17th, before the bank opened at 9 am, there were already queues at the door of HSBC near Happy Valley in Hong Kong. Several of them were fluent in Mandarin, and Wu Yi (a pseudonym) was one of them. She has come all the way from the mainland to open a bank card and has opened accounts in five or six banks one after another in the past few days.

Asked why he opened so many bank cards, Wu Yi said that many banks offer concessions for new funds, but the term is often not long, and she is going to tumble back and forth between several banks so that she can get a relatively high annualized interest rate.

"for example, if I deposit with Bank A now and it expires after three months, if I continue to deposit here, the interest rate will not be so high. I will transfer to another bank to continue to enjoy the new capital discount. After a while, I will be able to continue to enjoy the new capital discount interest rate when I transfer back to A Bank." Wu Yi said that she viewed a large number of strategy posts on social media and found that many netizens were tossing back and forth between several bank cards.

According to the BOC Hong Kong website, individual banking customers can use "qualified new capital balances" of at least HK $10,000, US $1,000 or RMB 10,000 through online banking or mobile banking. "New Capital Premium time Deposit" with a maturity of 3 months, 6 months or 12 months.

It is reported that the "qualified new fund balance" refers to the increase in the total value of customers' current deposits compared with the total value of deposits in the same currency at the end of last month, minus the cumulative principal amount of time deposits that have enjoyed all new capital concessions in the same currency during the month.

According to the above information on the official website, according to different currencies and deposit terms, BOC Hong Kong customers can enjoy a specific premium annual interest rate: 3 Hong Kong dollar deposits for 3 monthsVideopokersoftwareformac.50% for 6 months is 3.40%; US dollar deposits are 3.80% for 3 months and 6 months, while 3.50% for 12 months; RMB deposits are 1.80% for 3 months, 1.80% for 6 months, 1.90% for 12 months, 2.00%.

The official website of Hang Seng Bank shows that more than 10,000 Hong Kong dollars of new funds are deposited through online financial management channels, with an excellent annual interest rate of 3.6% for three months.

The preferential annual interest rate of the Bank of East Asia's three-month Hong Kong dollar new capital is 3.8%. HSBC Hong Kong dollar new capital time deposit preferential annual interest rate is 3.6%; US dollar new capital time deposit preferential annual interest rate is 4.0%.

At the same time, some banks in Hong Kong have stepped up their promotion efforts aimed at mainland residents. For example, ICBC Asia has launched a time-limited discount for time deposits during the Golden week, with an annual interest rate of 4.28% in Hong Kong dollars and 2.5% in RMB.

In addition, some banks have launched high-interest demand deposits, such as Standard Chartered Bank's high-interest marathon, which is divided into three stages, with interest rates rising step by step, with Hong Kong dollar deposits up to 4.5 per cent and US dollar deposits up to 4.8 per cent.

Citic Bank (International) website shows that from May 1 to May 30, 2024, deposits of eligible new funds and registration of Monopoly deposits can enjoy an annual interest rate of up to 7.28%.

In addition, banks tend to launch time deposit products with higher interest rates for high net worth customers. For example, for "VIP financial management" customers of China Construction Bank (Asia), the annualized interest rate of Hong Kong dollar fixed three-month deposits is 6%.

Photo by Luo Kun, New Jingwei in the Asian window of ▲ Jianyin

Overall, the deposit rates of banks in Hong Kong have fallen back compared with 2023, but they are still higher than those in the mainland. However, for ordinary investors, it is necessary to consider the cost of travelling back and forth, the cost of foreign exchange and so on, especially to open accounts in Hong Kong, and the high interest rates of some banks are mostly short-term interest rates.

According to statistics published by the Hong Kong Monetary Authority on April 30, total deposits with authorized institutions increased by 0.2 per cent in March 2024, with Hong Kong dollar deposits rising 0.7 per cent and foreign currency deposits falling 0.2 per cent. In the first quarter of 2024, total deposits fell by 0.2%, while Hong Kong dollar deposits increased by 0.1%. Renminbi deposits in Hong Kong fell 2.0 per cent in March to 944.7 billion yuan at the end of March. Renminbi remittances for cross-border trade settlement totaled 1.2484 trillion yuan in March, compared with 1.0644 trillion yuan in February.

According to the HKMA, deposit movements are affected by a number of factors, including interest rate movements, market fund-raising activities, and so on, so it is appropriate to observe longer-term trends and there is no need to over-interpret the fluctuations of individual months.

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The interest rate of this "deposit" is as high as 16%! What are the risks?

During the visit, Zhongxin Jingwei noticed that some banks focused on high-interest investment deposits / currency-linked contracts on LCD screens in shop windows or bank halls. As shown in the window of a branch of ICBC in Asia, the annual interest rate of the currency peg contract was as high as 15.87% on that day.

Photo taken by Luo Kun in the window of a branch of ▲ ICBC in Asia

Zhongxin Jingwei noticed that different banks have different names for this product. HSBC calls it a high-interest investment deposit with an annual interest rate of up to 12.5%. The "more special interest" investment deposit launched by Hang Seng Bank said on its website that foreign currency-linked investment deposits offer a potential interest return of 14.875% per annum.

The account manager of a branch of HSBC told Zhongxin Jingwei that you can invest in currency-linked contract products for as little as 5000 Hong Kong dollars, and mainland residents can also invest, but there are not many people buying them at present. Such products are more suitable for investors who already have a need for currency exchange, such as overseas travel, investment or tuition fees for children studying abroad.

According to reports, currency-linked investment products are structured investment products, including time deposits (made in deposit currency) and currency options (derivatives).

The Hong Kong Investor and Financial Education Council published an article stating that the return of currency-linked investment products depends on whether the market exchange rate is equal to or higher than the agreed exchange rate when the product expires.

An example is given in the article. If the base currency is Hong Kong dollars, the investment amount is HK$60000, the investment period is 14 days, the agreed exchange rate is 6.9588 (Australian dollar to Hong Kong dollar), and the annual interest rate is 16.5%. At maturity, assuming that the market exchange rate of Australian dollar to Hong Kong dollar is 7.20000, that is, higher than the agreed exchange rate, the investor will collect the due amount in the base currency, Hong Kong dollar. The cash amount due will be principal and interest of HK$60,379.73. This means that the income is HK$379.73.

If it expires, the market exchange rate of the Australian dollar against the Hong Kong dollar is 6.2300, which is lower than the agreed exchange rate. Investors will collect the due amount in the pegged currency, namely Australian dollars, at the agreed exchange rate. The cash amount due received will be converted into Australian dollars as principal and interest at the agreed exchange rate, and converted into Hong Kong dollars at the current market exchange rate on the maturity date will be HK$54,056.09. Therefore, investors will lose HK$5,943.91.

It is worth noting that although some banks call it "deposits", in fact such investment products are not equivalent to time deposits and are not covered by Hong Kong's deposit protection. The aforementioned article pointed out that in the worst case scenario, investors will likely lose all their investment money. Even if the currency-linked investment product is capital protected, this capital protected feature only applies if the investor holds the product until maturity. If the issuer becomes insolvent or defaults, investors will still lose all their investment.