The total return of the Bull's Eye notes will depend on the share price performance of four underlying stocks listed on the Hong Kong Stock Exchange. The four blue chip companies in the basket consist of China Life Insurance, China Mobile (Hong Kong), Hutchison Whampoa and PetroChina.
According to ING, the equity linked notes are skewed to Hong Kong investors looking to profit from the positive economic outlook in both China and Hong Kong and the subsequent growth in the equity markets. They are also marketed as offering the potential of greater return than most securities in a shorter investment period than in previous launches.
The equity linked notes will also offer a 8.6% fixed coupon payable at the end of the first six months and the minimum investment amount of the notes is HK$10,000 ($1,290).
A unique characteristic of ING's new equity linked notes is the early redemption feature, wherein redemption is triggered when the sum of returns of the two least performing stocks is equal to or above 0%, thus increasing the chance of an early redemption.
Under the Bull's-eye's platform, the later the redemption is triggered, the higher the early redemption coupon. According to ING, the early redemption coupon expands by 2% every six months, which amounts to maximum potential earning yield of up to 21.2% per annum as soon as an automatic early redemption is triggered.
If no automatic early redemption is triggered by the sum of the two least performing stocks, investors will receive a bonus coupon, calculated by the sum of returns of the least performing share and the second least performing share plus 8%. This potential bonus will be paid in addition to the fixed coupon of 8.6% payable after the first six months.
The note will be redeemed at maturity at 100% in cash if the closing price of the poorest performing stock is at or above 88% of its initial price at the last observation date. If the Bull's-eye notes drop below 88% of the initial price, then the note will be redeemed by physical delivery of the least performing stock.
The Bull's-eye equity linked notes will be open for subscription until 22 February 2006, with ING Investment Management Asia Pacific acting as the marketing and distribution coordinator. The investment product is available through the branches of Asia Commercial Bank, Bank of China (Hong Kong), Bank of Communications (Hong Kong), Chiyu Banking Corporation, CITIC Ka Wah Bank, Dah Sing Bank, ICBC (Asia), KGI Asia, MEVAS Bank, Nanyang Commercial Bank, Shanghai Commercial Bank, Sun Hung Kai Investment Services, Wing Hang Bank and Wing Lung Bank.