I recently opened an account with HSBC Hong Kong (I am a US citizen), and I'm exploring all of the options available to me at my new bank.

One product that caught my eye is called Deposit Plus, which appears to be kind of like forex trading, but there seems to be more to it than just that. As far as I can tell, one would deposit funds in one currency (e.g., HKD) and link the account to another currency (e.g., AUD).

The return on the investment is dependent upon whether and how much the linked currency appreciates against the deposit currency (but it seems to be more complicated than that, as it appears to be possible to make money if the linked currency remains stable or even weakens slightly against the deposit currency).

The potential returns look enticing (their marketing boasts 15-19% returns on featured currency pairs), so I think it's at least worth looking into, but I can't seem to find any information that explains how the product works.

Can anyone more familiar with the product or concepts involved lend some explanation?

3 Answers 3


HSBC, Hang Seng, and other HK banks had a series of special savings account offers when I lived in HK a few years ago. Some could be linked to the performance of your favorite stock or country's stock index.

Interest rates were higher back then, around 6% one year. What they were effectively doing is taking the interest you would have earned and used it to place a bet on the stock or index in question. Technically, one way this can be done, for instance, is with call options and zero coupon bonds or notes. But there was nothing to strategize with once the account was set up, so the investor did not need to know how it worked behind the scenes...

Looking at the deposit plus offering in particular, this one looks a little more dangerous than what I describe. See, now we are in an economy of low almost zero interest rates. So to boost the offered rate the bank is offering you an account where you guarantee the AUD/HKD rate for the bank in exchange for some extra interest. Effectively they sell AUD options (or want to cover their own AUD exposures) and you get some of that as extra interest. Problem is, if the AUD declines, then you lose money because the savings and interest will be converted to AUD at a contractual rate that you are agreeing to now when you take the deposit plus account. This risk of loss is also mentioned in the fine print. I wouldn't recommend this especially if the risks are not clear.

If you read the fine print, you may determine you are better off with a multicurrency account, where you can change your HK$ into any currency you like and earn interest in that currency.

None of these were "leveraged" forex accounts where you can bet on tiny fluctuations in currencies. Tiny being like 1% or 2% moves. Generally you should beware anything offering 50:1 or more leverage as a way to possibly lose all of your money quickly.

Since you mentioned being a US citizen, you should learn about IRS form TD F 90-22.1 (which must be filed yearly if you have over $10,000 in foreign accounts) and google a little about the "foreign account tax compliance act", which shows a shift of the government towards more strict oversight of foreign accounts.


15-19% gains also includes 15-19% and greater losses. They may not be required to disclose that to you in Hong Kong. If it isn't a leveraged account then that isn't too bad.

Hong Kong is a nice jurisdiction, The US Federal Government is the only person you don't hide your assets from - but they dont want anything - so just report the accounts as commanded and you'll be A-Okay.

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    The Deposit Plus product page the OP linked to does have a "Risk disclosure" section at the bottom. You're right: "Deposit Plus is not principal protected. You must be prepared to incur loss [...]" Commented Oct 8, 2011 at 12:27

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