IMPORTANT INFORMATION ─ CSOP Nifty 50 Daily (2x) Leveraged Product and CSOP Nifty 50 Daily (-1x) Inverse Product

Investments involve risks, including the total loss of your investment. Investors are advised to consider their own investment objectives and circumstances in determining the suitability of an investment in the CSOP Nifty 50 Daily (2x) Leveraged Product and the CSOP Nifty 50 Daily (-1x) Inverse Product (each a “Product” ,collectively the “Products”).

The CSOP Nifty 50 Daily (2x) Leveraged Product track the performance of a leveraged position of an index on a Daily basis whereas the CSOP Nifty 50 Daily (-1x) Inverse Product tracks the performance of a short position of an index on a Daily basis. The Products are only suitable for sophisticated trading-oriented investors who constantly monitor the performance of their holding on a daily basis, and are in a financial position to assume the risks in futures investments.

The Products are high risk products designed to be used as short term trading tools for market timing or hedging purposes and are not appropriate for long term (longer than one day) investment.  The performance of the Products, when held overnight, may deviate from the underlying indices. They may not be suitable for all investors. It is possible that the entire value of your investment could be lost.

Futures investments are subject to certain key risks including leverage, counterparty and liquidity risks. Movement in the prices of futures may be highly volatile.  Past performance information presented is not indicative of future performance. Investors should refer to the Prospectus and the Product Key Facts Statement (“KFS”) for further details, including product features and risk factors. Investors should not base on this material alone to make investment decisions. If you are in any doubt about the contents of the Prospectus and KFS, you should consult your stockbroker or other financial adviser for independent financial advice.

The Manager may, at its discretion, pay dividends out of capital. Payment of dividends out of capital or effectively out of the capital amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment. The Products may result in an immediate reduction of the NAV per Unit.

The material has not been reviewed by the SFC.

Knowledge about L&I product

  • Listed on the Hong Kong Stock Exchange, direct and simple as stock trading
  • Correspond to twice (2x) or the opposite (-1x) the Daily performance of the Index

Comparison between Leverage & Inverse Products, Derivatives Warrants and CBBCs

  L&I Product Derivatives Warrants CBBC
Underlying Index Index & single stock Index & single stocks
Initial Gearing 2x or -1x of index return on a daily basis 5 to 20x positive or opposite underlying return over times 5 to 40x positive or opposite underlying return over time
Gearing sensitivity Varies other than holding for one day (ie. Less than a full trading day or overnight) Varies with moneyness and time to maturity Varies significantly with moneyness
Intended Holding period Short term Short term Short term
Duration Perpetual With expiry With expiry
Time Decay No Yes Yes
Mandatory Call Event Risk No No Yes
Potential unlimited loss No No No
Major price movement factors Underlying price Underlying price, implied volatility Underlying price
Funding costs or management fees charged by issuers Transparent (ongoing charges and management fee are stated in the offering documents) Complicated (The funding costs are built into the price of the securities which is decided by the issuers) Complicated (The funding costs are built into the price of the securities which is decided by the issuers)
Issuer / counterparty default risk Underlying assets are kept separately at trustee’s account Investors face direct counterparty risk from product issuer Investor faces direct counterparty risk from product issuer
Underlying Index Index & single stock Index & single stocks

Short-Term products corresponding to twice (2x) or the opposite (-1x) the Daily performance of the Index

Leveraged and Inverse Products aim to deliver respectively twice or the opposite of the return of the Index on a daily basis only. If an investor hold the products for a period longer than one day, the cumulative returns could vary significantly from the multiple or the opposite performance over a longer period (more than one day) due to the compounding effect. The Product will rebalance its position on each business day so that its Daily exposure ratio to the Index is consistent with the Product’s investment objective.

From the example below, you can find out that the L&I products aim to deliver twice (2x) or the opposite (-1x) performance of the underlying index on a daily basis. However, over a period greater than one business day, the return can vary significantly from the predetermined leveraged factor (2x) or inverse factor (-1x) of the index daily performance, as you can find out that the cumulative change of Index is 4.5% while the leveraged product records a 8.0% gain and the inverse product records a 5.5% loss which differs from the (2x) or (-1x) Index accumulative return of 9% and -4.5% respectively.

Below is an illustration for the changes under the scenario of volatile upward trend:

Day 0 Day 1 Day 2
  Index level / NAV of product Daily change Index level / NAV of product Cumulative gain/loss Daily change Index level / NAV of product Cumulative gain/loss Cumulative change
Index 100 10% 110 10 -5% 104.5 4.5 4.5%
Leveraged Product (2x) 100 20% 120 20 -10% 108 8 8.0%
Inverse Product (-1x) 100 -10% 90 -10 5% 94.5 -5.5 -5.5%
    Index Leveraged Product (2x) Inverse Product (-1x)
Day 0 Index level / NAV of product 100 100 100
Day 1 Daily change 10% 20% 10%
Index level / NAV of product 110 120 90
Cumulative gain/loss 10 20 -5
Day 2 Daily change -5% -10% 5%
Index level / NAV of product 104.5 108 94.5
Cumulative gain/loss 4.5 8 5.5
Cumulative change 4.5% 8 5.5%

*The data in the table above are for illustrative purpose only and have not taken into account any management and trading fees that might involved.

Why CSOP Nifty 50 Daily (2x) Leveraged Product and CSOP Nifty 50 Daily (-1x) Inverse Product (“CSOP Nifty 50 Daily L&I Products”)

CSOP Nifty 50
Daily (2x)
Leveraged Product
CSOP Nifty 50
Daily (-1x)
Inverse Product

Product features

1. Simple and direct way to invest in the Indian market

Directly investing in SGX Nifty Index Futures, the CSOP Nifty 50 Daily L&I Products provide investors with a simple and direct access to India market.

2. One-stop solution

With CSOP Nifty 50 Daily L&I Products, investors can take both tactical long (daily 2x) and short (daily -1x) views and manage their portfolios efficiently.

CSOP Nifty 50 Daily (2x) Leveraged Product

Investment Objective

To provide investment results that, before fees and expenses, closely correspond to twice (2x) the Daily performance of the Index. The Leveraged Product does not seek to achieve its stated investment objective over a period of time greater than one day.

Investment Strategy

To achieve the investment objective of the Leveraged Product, the Manager will adopt a futures-based replication strategy through investing directly in the nearest month SGX Nifty Index Futures subject to the rolling strategy of the Leveraged Product, to obtain the required exposure to the Index.

SGX Nifty Index Futures (No more than 25% NAV of the Leveraged Product will be used as margin)
Cash (USD) and USD denominated investment products (Not less than 75% of NAV under normal circumstances)
CSOP Nifty 50 Daily (2x) Leveraged Product
  • Listing Date
  • Stock Ticker
  • Inception Price
  • Trading lot size
  • 20 July 2016
  • 07202
  • Approx. HKD 15
  • 100

CSOP Nifty 50 Daily (-1x) Inverse Product

Investment Objective

To provide investment results that, before fees and expenses, closely correspond to the inverse (-1x) of the Daily performance of the Index. The Inverse Product does not seek to achieve its stated investment objective over a period of time greater than one day.

Investment Strategy

To achieve the investment objective of the Inverse Product, the Manager will adopt a futures-based replication strategy through investing directly in the nearest month SGX Nifty Index Futures subject to the rolling strategy of the Inverse Product, to obtain the required exposure to the Index.

SGX Nifty Index Futures (No more than 12.5% NAV of the Inverse Product will be used as margin)
Cash (USD) and USD denominated investment products (Not less than 87.5% of NAV under normal circumstances)
CSOP Nifty 50 Daily (-1x) Inverse Product
  • Listing Date
  • Stock Ticker
  • Inception Price
  • Trading lot size
  • 20 July 2016
  • 07335
  • Approx. HKD 15
  • 100
Investing in India

Fastest-growing large economy in the world

According to IMF, India is the world’s fastest-growing economy. The GDP growth projection for 2016 reaches 7.5%.

Emerging market country with young labor force

With more than 50% population below the age of 25 and more than 65% below the age of 35, India is considered as the next world factory with the largest labor resources.

Upward trend in Foreign Direct Investment (“FDI”)

Due to its huge potential, India has been one of the favorite markets for global investors. The FDI increased to USD 16.6 bn in the first half of FY2015 to 2016.

Fast and healthily growing stock market

Together with India’s economy, India’s stock market has also been growing rapidly – tripling the size in the past 10 years.

Nifty 50 Index

The Index is a price return, float-adjusted market capitalisation weighted index that tracks the behaviour of a portfolio of blue chip companies, the 50 largest and most liquid Indian securities listed on the National Stock Exchange of India Ltd. (the “NSE”). The Index is denominated in Indian Rupees (“INR”).

As on 31 March 2016, the Index comprised of 50 securities listed on the NSE with total market capitalisation of INR30.33 trillion, capturing approximately 65% of the total float-adjusted market capitalisation of the NSE.

Index 2016
2016H1
2015 2014 2013 2012 2011
NIFTY 50 Index 5.43 -3.10 31.18 6.70 27.70 -23.62
MSCI Emerging Market Index 3.74 -16.63 -4.14 -4.97 15.15 -18.16
Index NIFTY 50 Index MSCI Emerging Market Index
2016H1 5.43 3.74
2015 -3.10 -16.63
2014 31.18 -4.14
2013 6.70 -4.97
2012 27.7 15.15
2011 -23.62 -18.16
Source: Bloomberg, as of June 2016
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If you do not wish your personal data to be used for direct marketing purposes, you may notify us in writing to the following address:-

Head of Legal & Compliance

CSOP Asset Management Limited,
2801-2802 Two Exchange Square
8 Connaught Place, Central
Hong Kong

Upon receipt of such notice, we shall, without charge to you, cease using your personal data for direct marketing purposes.

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