Index-linked bond China
Basic and Extra
The rationale of investing in China is essentially one of economic growth. Due to its staggering economic growth, China is expected to rank the world's second-largest economy within a decade. Invest in China with capital protection through Index-linked bond China to control the risks associated with a rapidly emerging equity market.
China Basic
- Investment period about five years
- Nominal capital protected
- FTSE/Xinhua China 25
- Participation rate 70%
- Subscription price variable, about 100%
China Extra
- Investment period about five years
- Nominal capital protected
- FTSE/Xinhua China 25
- Participation rate 120%
- Subscription price variable, about 110%
Chinese economic growth is quite unparalleled in history. In 2007 the GDP growth exceeded ten percent for the fourth consecutive year. Since 1980, China's annual economic growth has averaged about 9-10%. Although private consumption grew over 50% in 2000-2006, China's GDP per capita is still only about a fifth in comparison to the US. By 2030, China's GDP per capita is expected to reach the United States' current level. The gigantic domestic market, economic reforms, opening of the markets and focus on entrepreneurship will continue to boost Chinese economic growth going forward.
Now you can invest in China in a cost-effective manner, while staying in control of the risks associated with an emerging equity market. Nordea Bank Finland Plc's index-linked bond is care-free way to enjoy the fruits of the equity market; if China's equity markets continue the upward trend, the value of your investment will increase. If equity prices drop, you will still receive your nominal capital back on the maturity date.
The index-linked bond has two alternatives: Basic and Extra. The return on the Basic bond, suitable for a conservative investor, at maturity is 70% of the rise of the reference index in accordance with the terms of issue. The Extra bond suits investors who tolerate limited risk and seek a higher return. The return on the investment at maturity is 120% of the rise of the reference index in accordance with the terms of issue. When the reference index falls or remains unchanged, no return is paid and the investor loses the amount paid above par value (in the Extra bond about 10%).
The maturity of both alternatives is about five years and the nominal capital is repaid at maturity regardless of the development of the reference index. The investment can also be sold before maturity, in which case the repurchase price may be above or below the nominal value depending on market performance.
Reference index: FTSE/Xinhua China 25
The FTSE/Xinhua China 25 is a capitalisation-weighed index including the 25 largest and most actively traded Chinese companies listed in Hong Kong. The largest industries in the index are telecommunications, energy and transportation. Further information on the index is available on the Internet at: www.ftsexinhua.com
Performance of the reference index in January 2002 - February 2008 (Starting level indexed at one hundred)
Yield table for the index-linked bonds China Basic and Extra
| Change in the reference index according to the terms of the issue | China Basic | China Extra | ||
|---|---|---|---|---|
| Issue price ca. | 100% | Issue price ca. | 110% | |
| Participation rate | 70% | Participation rate | 120% | |
| Value at maturity | Return p.a. | Value at maturity | Return p.a. | |
| -50% | 100% | 0.0% | 100% | -1.9% |
| -25% | 100% | 0.0% | 100% | -1.9% |
| 0% | 100% | 0.0% | 100% | -1.9% |
| 25% | 118% | 3.3% | 130% | 3.4% |
| 50% | 135% | 6.2% | 160% | 7.8% |
| 75% | 153% | 8.8% | 190% | 11.6% |
| 100% | 170% | 11.2% | 220% | 14.9% |
Index-linked bonds 4107A and 4107B under the Medium-Term Note programme (an index-linked bond programme reported to the Finnish Financial Supervision Authority from Sweden in accordance with the Prospectus Directive) of Nordea Bank AB (publ) and Nordea Bank Finland Plc dated 7 June 2007. Bond-specific terms are available at places of subscription.
Disclaimer
Presented data are just for informative purposes and can not be interpreted as recommendation of personal or general nature, instruction or offer to buy or sell securities and can not be ground for any concluded transaction.
Consult with advisers of the bank before deciding to invest in the index-linked bonds mentioned herein. Together you shall ascertain all their features and estimate probable risk factors, which could arise while investing into index-linked bonds.
You can read more about probable risks related to investments in index-linked bonds in prospectus of index-linked bonds emission.
Before taking decision to invest in index-linked bonds herein, You have to familiarize Yourself with prospectus of index-linked bonds emission and risk factors and to evaluate yourself or with the help of advisors if such risk is acceptable to you and investment is suitable to You taking into account Your investment goals, knowledge and financial position.