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Global X Hang Seng China Enterprises Index Daily (2x) Leveraged Product (Stock Code: 7230)

Notice on HSI and HSCEI Leveraged and Inverse Products 1-for-2 unit subdivision
(effective date: 9 am on 13rd Nov 2017)

 

Investment involves risks. Please refer to the Prospectus for details including as to the risk factors.


Global X Hang Seng China Enterprises Index Daily (2x) Leveraged Product

Investment risk

  • The Product is a derivative product and not suitable for all investors. There is no guarantee of the repayment of principal. Therefore your investment in the Product may suffer substantial/total losses.

Long term holding risk

  • The Product is not intended for holding longer than one day as the performance of the Product over a period longer than one day will very likely differ in amount and possibly direction from the leveraged performance of the Index over that same period (e.g. the loss may be more than twice the fall in the Index).
  • The effect of compounding becomes more pronounced on the Product’s performance as the Index experiences volatility. With higher Index volatility, the deviation of the Product’s performance from the leveraged performance of the Index will increase, and the performance of the Product will generally be adversely affected.
  • As a result of Daily rebalancing, the Index’s volatility and the effects of compounding of each day’s return over time, it is even possible that the Product will lose money over time while the Index’s performance increases or is flat.

Leverage risk

  • The Product will utilise leverage to achieve a Daily return equivalent to twice (2x) the return of the Index. Both gains and losses will be magnified. The risk of loss resulting from an investment in the Product in certain circumstances including a bear market will be substantially more than a fund that does not employ leverage.

Risk of rebalancing activities

  • There is no assurance that the Product can rebalance its portfolio on a Daily basis to achieve its investment objective. Market disruption, regulatory restrictions or extreme market volatility may adversely affect the Product’s ability to rebalance its portfolio.

Liquidity risk

  • The rebalancing activities of the Product typically take place near the end of a Business Day, at or around the close of trading of the underlying markets, to minimise tracking difference. As a result, the Product may be more exposed to the market conditions during a shorter interval and may be more subject to liquidity risk.

Intraday investment risk

  • Leverage factor of the Product may change during a trading day when market moves but it will not be rebalanced immediately. The Product is normally rebalanced near the end of a Business Day, at or around the close of trading of the underlying markets. As such, return for investors that invest for a period less than a full trading day may be greater than or less than two times (2x) leveraged investment exposure to the Index, depending upon the movement of the Index from the last rebalancing until the time of purchase.

Portfolio turnover risk

  • Daily rebalancing of Product’s holdings causes a higher level of portfolio transactions than compared to the conventional ETFs. High levels of transactions increase brokerage and other transaction costs.

Futures contracts risks

  • The Product is a futures based product. Investment in futures contracts involves specific risks such as high volatility, leverage, rollover and margin risks. The leverage component of futures contracts can result in a loss significantly greater than the amount invested in the futures contracts by the Product. Exposures to futures contracts may lead to a high risk of significant loss by the Product.
  • A “roll” occurs when an existing futures contract is about to expire and is replaced with a futures contract representing the same underlying but with a later expiration date. The value of the Product’s portfolio (and so the Net Asset Value per Unit) may be adversely affected by the cost of rolling positions forward (due to the higher price of the futures contract with a later expiration date) as the futures contracts approach expiry.
  • There may be imperfect correlation between the value of the underlying reference assets and the futures contracts, which may prevent the Product from achieving its investment objective.

Volatility risk

  • Prices of the Product may be more volatile than conventional ETFs because of using leverage and the Daily rebalancing activities.

Holding of HSCEI Futures Contracts restriction in number risk

  • The positions of futures contracts or stock options contracts held or controlled by the Manager, including positions held for the Manager’s own account or for the funds under its management (such as the Product) but controlled by the Manager, may not in aggregate exceed the relevant maximum under the Securities and Futures (Contracts Limits and Reportable Position) Rules (the “Rules”). Accordingly, if the position held or controlled by the Manager reaches the relevant position limit or if the Net Asset Value of the Product grows significantly, the restrictions under the Rules may prevent creations of Units due to the inability under the Rules of the Product to acquire further HSCEI Futures Contracts. This may cause a divergence between the trading price of a Unit on the SEHK and the Net Asset Value per Unit. The investment exposure could also deviate from the target exposure which adds tracking error to the Product.

Concentration and mainland China market risk

  • The Product is subject to concentration risks as a result of tracking the leveraged performance of a single geographical region or country (the PRC including Hong Kong). The value of the Product may be more volatile than that of a fund having a more diverse portfolio of investments. The Index constituents are companies incorporated in the PRC which are listed on the SEHK and primarily traded in Hong Kong, and have substantial business exposure to the PRC, an emerging market. Investments of the Product may involve increased risks and special considerations not typically associated with investment in more developed markets, such as liquidity risks, currency risks/control, political and economic uncertainties, legal and taxation risks, settlement risks, custody risk and the likelihood of a high degree of volatility.

Passive investments risks

  • The Product is not “actively managed” and therefore the Manager will not have discretion to adapt to market changes when the Index moves in an unfavourable direction to the Product. In such circumstances the Product will also decrease in value.

Trading risks

  • The trading price of the Units on the SEHK is driven by market factors such as the demand and supply of the Units. Therefore, the Units may trade at a substantial premium or discount to the Net Asset Value.
  • As investors will pay certain charges (e.g. trading fees and brokerage fees) to buy or sell Units on the SEHK, investors may pay more than the Net Asset Value per Unit when buying Units on the SEHK, and may receive less than the Net Asset Value per Unit when selling Units on the SEHK.

Trading differences risk

  • The HKFE and the SEHK have different trading hours. As the HKFE may be open when Units in the Product are not priced, the value of the HSCEI Futures Contracts in the Product’s portfolio may change at times when investors will not be able to purchase or sell the Product’s Units. Difference in trading hours between the HKFE and the SEHK may increase the level of premium/discount of the Unit price to its Net Asset Value.
  • Trading of the Index constituents closes earlier than trading of the HSCEI Futures Contracts so there may continue to be price movements for HSCEI Futures Contracts when Index constituents are not trading. There may be imperfect correlation between the value of the Index constituents and the HSCEI Futures Contracts, which may prevent the Product from achieving its investment objective.

Tracking error and correlation risks

  • Fees, expenses, transaction costs, high portfolio turnover, liquidity of the market and the investment strategy adopted by the Manager may result in tracking error, and the reduced correlation between the performance of the Product and the two times (2x) Daily performance of the Index. The Manager will monitor and seek to manage such risk in minimising tracking error. There can be no assurance of exact or identical replication at any time of two times (2x) the Daily performance of the Index.

Termination risk

  • The Product may be terminated early under certain circumstances, for example, where there is no market maker, the Index is no longer available for benchmarking or if the size of the Product falls below HKD80 million. Any distribution received by a Unitholder on termination of the Product may be less than the capital initially invested by the Unitholder, resulting in a loss to the Unitholder.

Reliance on market maker risks

  • Although it is a requirement that the Manager will ensure that at least one market maker will maintain a market for the Units and gives not less than 3 months’ notice prior to terminating market making arrangement under the relevant market maker agreement, liquidity in the market for the Units may be adversely affected if there is only one market maker for the Units. Also, the Product may be required by the SFC to be terminated if there is no market maker for the Units. There is no guarantee that any market making activity will be effective.

All dollar amounts are in HKD and all dates are in GMT+8 Time, unless otherwise specified.

Product objective and investment strategy

The Product seeks to provide investment results that, before deduction of fees and expenses, closely correspond to twice (2x) the Daily performance of the Hang Seng China Enterprises Index (HSCEI) (the “Index”). The Product does not seek to achieve its stated objective over a period of time greater than one day.

“Daily” in relation to the leveraged performance of the Index or performance of the Product, means the leveraged performance of the Index or performance of the Product (as the case may be) from the close of the relevant market of a given Business Day until the close of the relevant market on the subsequent Business Day.

In seeking to achieve the Product’s investment objective, the Manager will adopt a futures-based replication investment strategy through investing directly in the spot month HSCEI Futures Contracts and in the spot month Mini-Hang Seng China Enterprises Index Futures Contracts, subject to the rolling strategy discussed below, to obtain the required exposure to the Index. For the purpose of this product key facts statement, any reference to HSCEI Futures Contracts shall include Mini-Hang Seng China Enterprises Index Futures Contracts, unless the context requires otherwise.

In entering the spot month HSCEI Futures Contracts, the Manager anticipates that not more than 20% of the Net Asset Value of the Product from time to time will be used as margin to acquire the HSCEI Futures Contracts. Under exceptional circumstances (e.g. increased margin requirement by the exchange in extreme market turbulence), the margin requirement may increase substantially.

Not less than 70% of the Net Asset Value of the Product (this percentage may be reduced proportionally under exceptional circumstances when there is a higher margin requirement, as described above) will be invested in cash and cash equivalents (e.g. short term deposits) denominated in HKD. Yield in HKD from such cash and investment products will be used to meet the Product’s fees and expenses and after deduction of such fees and expenses, the remainder (if any) will be reinvested into the Product. In addition, the Product will invest up to 10% of its Net Asset Value in exchange traded funds listed in Hong Kong, the investment objective of which are to track the performance of the Index, and which are not managed by any member of the Mirae Asset Group (“HSCEI ETFs”).

The Product will not enter into securities lending, repurchase, reverse repurchase or other similar over-the-counter transactions.

 

Estimated NAV per Unit [1]

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$ --
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$ --

Daily NAV per Unit [3] {{ navasofdate | madate:plocale }}

NAV
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Change ($)
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Change (%)
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Product information {{ navasofdate | madate:plocale}}

Product Inception Date
10 Mar 2017
Listing date on the HKEx
14 Mar 2017
Financial year end of the Product
Ending 31 Mar each year
Ongoing charges over a year[4]
(annual average daily
ongoing charges)[5]
Estimated 2.96% (0.0118%)
Management Fee[6]
Up to 0.65% per annum of the NAV
Distribution Frequency
The Manager does not intend to pay or make any distributions or dividends
Equity Exposure
Futures-Based

Index information [7] {{ indexasofdate | madate:plocale }}

Underlying Index
Hang Seng China Enterprises Index (HSCEI)
Index Provider
Hang Seng Indexes Company Limited
Type of Index
Price return
Base currency
HKD
Closing Level
{{ closing }}
Change
{{ pricechange }}
Change %
{{ pctchange | number:2}} %

Trading information {{navasofdate | madate:plocale }}

Exchange
Hong Kong Stock Exchange
Stock Code
7230
ISIN
HK0000323169
Board Lot Size
100 Units
Trading Currency
HKD
Total NAV
{{ navtotal | currency }}
Outstanding Units
{{ navoutstanding | number }}

Appropriation

Leverage
Daily 2x
Actively Managed
No
Swap Base
No
Derivative Base
Yes
Securities Lending
No

Daily Holdings {{ holdasofdate | madate:plocale }}

Total Net Asset Value (HKD)
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Total Value of Futures Contracts (HKD) ($)
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Total Value of Mini Futures Contracts (HKD) ($)
{{ holdminifutvalue| currency }}
Total Value of ETF Contracts (HKD)($)
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Total Contracts Exposure [8] (%)
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View all holdings

Participating dealers [9]

  • ABN AMRO Clearing Hong Kong Limited
  • BNP Paribas Securities Services
  • China Merchants Securities (HK) Company Limited
  • Goldman Sachs (Asia) Securities Limited
  • Guotai Junan Securities (Hong Kong) Limited
  • Haitong International Securities Company Limited
  • Merrill Lynch Far East Limited
  • Mirae Asset Securities (HK) Limited
  • Yue Kun Research Limited

Market makers [10]

[1]
Estimated NAV per unit is indicative only and is provided on a 15-second delayed basis by Interactive Data Managed Solutions. (See terms and conditions) and is updated during trading hours of the HKEx.
[2]
Market prices are provided on a 15-minute delayed basis by Interactive Data Managed Solutions. (See terms and conditions)
[3]
Change indicates the change since the previous business day. For more information on calculation of NAV, please refer to the Prospectus.
[4]
It is an estimated figure based on the Product’s estimated expenses expressed as a percentage of the Product’s Net Asset Value as at 3 April 2020 (with assumption that the Product’s Net Asset Value remaining unchanged until the financial year end) after a material change in the Product’s Net Asset Value due to sizable redemption. The figure may vary from year to year.
[5]
The annual average daily ongoing charges figure is equal to the ongoing charges figure divided by the number of dealing days for the year ended 31 March 2020. The figure may vary from year to year.
[6]
Please note that such a fee may be increased up to a permitted maximum amount by providing 1 month’s prior notice to Unitholders. Please refer to the “Fees and Charges” section of the Prospectus for details.
[7]
Index returns are for illustrative purposes only and should not be taken as an indication or guarantee of future performance. Management fees, transaction costs or other expenses are not reflected in index returns. Change indicates the change since the previous business day's closing index level. (Source: Hang Seng Indexes Company Limited).
[8]
% of Futures Contract in Total asset.
[9]
Additional Participating Dealer(s) will be appointed from time to time.
[10]
Additional Market Maker(s) will be appointed from time to time.

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