Risk Disclosure

General Risk Warning and Disclaimer

Investing involves risk. Certain investment products are not suitable for any individual. Investors should carefully consider whether they are suitable to participate in such transactions in light of their own investment experience, investment objectives, financial resources and other relevant conditions. The prices of investment products and their income may go up as well as down. Past performance is not an indicator of future performance. In some cases, investors may lose their entire capital.

In general, investors should invest in investment products that they are familiar with and understand the risks involved. The following risk warnings about each investment product are not exhaustive. Before making an investment decision, investors should carefully consider whether the investment product/service is suitable for their financial situation, investment objectives and experience, risk tolerance, and other relevant circumstances. Risks associated with investing in products/services (please read the relevant offering documents for details).

Risk of client assets received or held outside Hong Kong

Client assets received or held by licensed or registered persons outside Hong Kong are governed by the applicable laws and regulations of the relevant overseas jurisdictions. These laws and regulations may conflict with the Securities and Futures Ordinance (Cap. 571) and the rules made thereunder. Accordingly, the underlying client assets may not enjoy the same protection as client assets received or held in Hong Kong.

Currency risk

Profits or losses incurred on the sale or purchase of contracts in foreign currencies (whether in the investor's own jurisdiction or elsewhere) are subject to the exchange rate at which the unit currency of the contract is converted into another currency volatility effects.

Electronic transactions

If trading is carried out through electronic services, investors are exposed to the risks brought about by the electronic service system, including hardware or software failure. System failures may result in investors' orders not being executed according to their instructions, or not being executed at all.

Electronic services may be unreliable due to unexpected traffic congestion and other reasons. Transactions conducted through electronic services may also be delayed or delayed in the process of transmitting and receiving investor instructions or other information, and may be different from the market price at the time of the investor's instruction, and may even be interrupted or halted during transmission. There is also a risk of misunderstanding or error in the communication process. Cancellation is not necessarily possible after an instruction has been issued. Zhongheng Financial shall not be liable for any losses suffered by customers due to such interruptions, delays or access by third parties. If investors are not prepared to accept the risk of such interruption or delay, they should not give any instructions through the electronic service. Market data and other information provided to investors through electronic services may be obtained by Zhongheng Financial from third parties. Although Zhongheng Financial believes that such data and information are safe and reliable, Zhongheng Financial or these third parties do not guarantee the accuracy, completeness and timeliness of the data and information.


Risks of Securities Trading

The price of securities can go up as well as down, and at times can be very volatile and even become worthless. Trading securities may not necessarily result in a profit, but may incur losses.

Risks of Margin Trading

The risk of loss in financing a transaction by depositing collateral can be substantial. Investors may suffer losses in excess of cash and any other assets deposited by investors with Zhongheng Financial as collateral. Market conditions may make it impossible to execute alternate orders, such as "stop-loss" or "stop-limit" orders. Investors may be required to deposit additional margin amounts or pay interest within a short period of time. If the investor fails to pay the required margin amount or interest within the specified time, the investor's collateral may be sold without the investor's consent. In addition, the investor will be responsible for any shortfall in the investor's account and the interest payable as a result. Therefore, investors should carefully consider whether such financing arrangements are suitable for investors in light of their own financial situation and investment objectives.

Risks of providing a power of attorney to repledge investors' securities collateral, etc.

Provide a licensed or registered person with a power of attorney to use an investor's securities or securities collateral in accordance with a securities lending agreement, to repledge the investor's securities collateral for financial accommodation, or to transfer the investor's securities The collateral is deposited as collateral for the performance and satisfaction of its settlement obligations and debts, and there are certain risks. If the investor's securities or securities collateral are received or held in Hong Kong by a licensed or registered person, the above arrangements will only be effective if the investor has given written consent to this. In addition, unless the investor is a professional investor, the investor's power of attorney must specify an expiry date, which cannot exceed 12 months. This restriction does not apply if the client is a professional investor.

In addition, if the investor's licensed or registered person issues to the investor at least 14 days before the expiry of the relevant authorization, the relevant authorization will be deemed to have been renewed, and the investor is not satisfied with the relevant authorization before the expiry of the relevant authorization. The Investor's Authorization will be deemed to have been renewed without the Investor's written consent.

There is currently no legislation requiring investors to sign such powers of attorney. However, a licensed or registered person may require a power of attorney in order to, for example, provide investors with margin loans or be permitted to lend or deposit an investor's securities or securities collateral to third parties as collateral. The licensee or registrant should explain to the investor for what purpose the user license will be used.

If an investor signs a power of attorney and the investor's securities or securities collateral have been lent or deposited with third parties, such third parties will have a lien or charge on the investor's securities or securities collateral. While the licensed or registered person in question lent or deposited securities or securities collateral belonging to the investor pursuant to the investor's authorization, the investor is liable for any default by such licensed or registered person, which may result in investment loss of the investor's securities or securities collateral.

Most licensed or registered persons offer cash accounts that do not involve securities lending. If investors do not need margin loans, or do not want their securities or securities collateral to be lent or pledged, they should not sign the above authorization and should request to open such cash accounts.

Risks of trading GEM shares

GEM shares involve high investment risks. In particular, these companies can list on the Growth Enterprise Market without having a track record of profitability and without having to forecast future earnings. ChiNext shares can be very volatile and very illiquid. Investors should be cautious and considerate before making such investment decisions. The higher risk nature and other characteristics of the ChiNext market mean that this market is more suitable for professional and other investors who are familiar with investment skills. Currently, data on GEM shares can only be found on the Internet website operated by The Stock Exchange of Hong Kong Limited. GEM listed companies are generally not required to publish paid announcements in gazetted newspapers. Investors should seek independent professional advice if they have any doubts about the content of this risk disclosure statement or the nature of the ChiNext market and the risks involved in trading shares on ChiNext.

Risks of Trading Nasdaq-Amex Securities on The Stock Exchange of Hong Kong Limited

Securities listed for trading under the Nasdaq-Amex Pilot Program (the "Pilot Program") are intended for investors familiar with investment skills. Investors should consult the licensed or registered person concerned and familiarize themselves with the pilot scheme before trading in the securities of the pilot scheme. Investors should be aware that securities listed for trading under the pilot scheme are not regulated as primary or secondary listings on the Main Board or Growth Enterprise Market of The Stock Exchange of Hong Kong Limited.

Apply to subscribe for new shares

Risks of applying for new shares

When applying to subscribe for new shares, the allocation basis of the shares is not known in advance. Investors must be prepared that in the event of substantial over-subscription of the relevant shares, investors may be allocated only a portion of the proposed shares, or even no shares at all. Conversely, if the new shares are not as popular as expected, investors may be allotted more shares than expected. When an investor applies to subscribe for new shares, even if the investor is not allocated any shares, the relevant financial charges will be paid.

The price of new shares will not necessarily rise above the IPO price on the day they are listed. The performance of IPOs is also affected by the overall market sentiment. The price of the shares may fall below the IPO price.

If investors use margin (commonly known as "margin") to borrow to subscribe for new shares, the profits investors expect to earn from investing in new shares may not necessarily be able to offset the related transaction costs and interest expenses. Investors may incur losses if they fail to sell their shares above the IPO price as expected.


Warrant-specific risks

Product Risk

The types of underlying assets issued by warrants are stocks, a basket of stocks, indices or currencies. The value of a warrant will depend on a number of factors, such as the strike price, the price level of the underlying stock or index, the volatility of the underlying stock or index, time remaining until expiration, interest rates, dividends, and more. Therefore, investors must be familiar with the mechanism of warrants before purchasing.

Leverage Risk

Warrants are leveraged products whose value can change rapidly according to the leverage ratio relative to the underlying asset. Investors should note that the value of the warrants can fall to zero, and the funds originally invested will be lost.

Publisher default risk

If a warrant issuer goes bankrupt and fails to meet its obligations for the securities it issues, investors are considered only unsecured creditors and have no priority claim against any of the issuer's assets. Therefore, investors should pay special attention to the financial strength and credit of the warrant issuer.

Expiration Period Considerations

Warrants have a limited validity period. The value of the warrant will be eroded as it approaches expiration. At expiration, the warrants cannot be bought, sold or exercised, and even become worthless. Investors may lose the entire investment amount and related transaction fees (if any). Therefore, investors should pay attention to the expiration time of the product and ensure that the remaining validity period of the selected product can match their trading strategy.

Forex Risk

If the underlying assets of the warrants are not denominated in Hong Kong dollars, investors still have to face foreign exchange risks. Fluctuations in currency exchange rates can negatively affect the value of the underlying asset, which in turn affects the price of warrants.

Some additional risks of buying and selling derivative warrants

Time wastage risk

All other things being equal, the value of a derivative warrant will decrease as it approaches its expiry date, so it cannot be considered a long-term investment.

Volatility Risk

The price of life warrants may rise or fall with the implied volatility of the underlying asset price. Investors should pay attention to the volatility of the underlying asset.

Some additional risks of trading CBBCs

Mandatory withdrawal risk

Investors trading CBBCs should pay attention to the feature that CBBCs can be "cancelled" or forcibly withdrawn on the same day. If the underlying asset value of the CBBC is equal to the mandatory call price/level stated in the listing document, the CBBC will cease to be traded. At that time, investors can only recover the residual value of the CBBCs whose trading has been stopped, calculated by the product issuer according to the listing document (note: the residual value can be zero).

Financing Costs

The issue price of CBBCs includes financing costs. The financing cost will gradually decrease as the CBBCs approach the expiry date. The longer the tenor of the CBBC, the higher the total financing cost. If the CBBC is withdrawn for one day, the investor will lose the financing cost for the entire validity period of the CBBC. The procedure for calculating the financing cost is set out in the CBBC's listing document.

Structured Products

Risks of Structured Products

Publisher default risk

In the event that a structured product issuer becomes insolvent and fails to meet its obligations with respect to the securities issued, it is only considered an unsecured creditor and has no priority claim against any of the issuer's assets. Therefore, investors should pay special attention to the financial strength and creditworthiness of structured product issuers.

Uncollateralized structured products are not asset-backed. If the issuer goes bankrupt, investors can lose their entire investment. To determine whether a product is non-collateralized, investors must read the listing documents carefully.

Leverage Risk

Structured products such as Derivative Warrants and CBBCs are leveraged products whose value can change rapidly according to the leverage ratio relative to the underlying asset. Investors should be aware that the value of structured products can drop to zero, at which point the funds originally invested will be lost.

Expiration Period Considerations

Structured products have an expiration date, after which the product is worthless. Investors should pay attention to the expiration time of the product to ensure that the remaining validity period of the selected product can match their trading strategy.

Special price move

The price of structured products may differ from its theoretical price due to external factors (such as market supply and demand), so the actual transaction price may be higher or lower than the theoretical price.

Forex Risk

If the underlying assets of the structured products traded by investors are not denominated in Hong Kong dollars, investors still face foreign exchange risks. Fluctuations in currency exchange rates can negatively affect the value of the underlying assets, which in turn affects the prices of structured products.

Liquidity risk

The Exchange requires all structured product issuers to appoint a liquidity provider for each individual product. The responsibility of the liquidity provider is to provide both sides of the product to facilitate trading. If a liquidity provider defaults or stops performing its duties, investors may not be able to trade related products until a new liquidity provider is appointed.

Specific Risks of Accumulated Call Option Investments

Cancel event

When the market price of the underlying asset reaches or exceeds the cancellation price, the accumulated option contract will be terminated (i.e. the investor will no longer accumulate any underlying asset from the cancellation date), Therefore, the investor's potential profit cap will be locked by the cancellation price.

Potential losses will increase and may be substantial

Due to the constraints of the accumulative option contract, investors are required to buy a predetermined amount of the underlying asset on a regular basis (such as daily) (according to the strike price). When the market price falls below the strike price, the investor may suffer significant losses. When market conditions are unfavorable for investors, investors are required to buy double or multiple of the agreed amount of the underlying assets, and the maximum amount of risk that the client must bear after taking into account the "multiplier" clause.

Early termination

Investors must understand that investors may not be able to terminate the accumulator contract early, and even if the request for early termination is accepted by the client, the investor may still have to pay larger than expected exit fees and losses.

Contract Period

Accumulated call option contracts with longer maturities carry higher risks and, in general, higher early termination fees.

Specific risks of equity-linked investments

Equity-linked investments are not principal protected. If the price of the reference asset deviates from the investor's expectations, the investor will suffer a loss. In extreme cases, investors may lose their entire investment.

Potential earnings from ELIs may be limited to a cap set by the issuer.

When investors buy equity-linked investments, investors rely on the creditworthiness of their issuers. In the event of default or insolvency of the issuer, regardless of the performance of the reference asset, investors can only rely on the investor's distributor to file a claim against the issuer as an unsecured creditor on the investor's behalf.

Equity-linked investments are not secured by any assets or collateral.

Issuers may only offer limited market making activities for their equity-linked investments. However, if an investor attempts to sell the relevant ELI through market making provided by the issuer prior to maturity, the investor may receive much less than the initial investment amount.

During the investment period, investors do not have any rights to the reference asset. Changes in the market price of the reference asset may not result in a corresponding change in the market value and/or potential distributions of the ELI.

In the event of unforeseen circumstances related to the ELI, the publisher may, in accordance with its exclusive and absolute rights, change the terms of the ELI to suit the circumstances. If no changes are made to maintain the returns of the ELI, the issuer may terminate the product early and pay the investor its fair market value amount at its discretion. The amount for early termination may be significantly lower than the investor's original investment amount.

Mutual Funds

Market Risk

Investing in funds involves general market risks and the value of funds may fluctuate due to various factors, such as politics, economic conditions or interest rates.

Liquidity risk

Investing funds in products that are difficult to monetize or require an expensive cost to monetize will become a heavy burden. If the underlying investment falls sharply in a volatile market and cannot be sold, the investor's fund price may fall significantly.

Exchange rate risk

If the investor's fund or part of the underlying fund is denominated in a foreign currency, the investor may be exposed to relevant exchange rate risks.

Credit risk

The company or issuer of bonds owned by the fund may not be able to repay debts (including debts owed to bondholders.

Controlling concentration risk

Funds that invest heavily in certain markets or companies (eg emerging markets, commodity markets, small businesses, etc.) may involve higher risks and are generally more sensitive to price changes.


Bonds are not equivalent to time deposits and are not protected by the Hong Kong Deposit Protection Scheme. Investors should not invest in bonds unless they fully understand and are willing to take the risks associated with them. Investors should seek independent advice if in doubt about the associated risks.

Issuer risk

Bonds are subject to the issuer's actual and expected creditworthiness. If the issuer of the bond defaults, the bond does not guarantee that the issuer will necessarily pay or repay the bond, and investors may not be able to recover the principal and any coupons. Different bonds represent and contain different responsibilities of the issuer. For example, the issuer's repayment obligations can be classified as direct, unsubordinated, subordinated, unsecured or secured. If the issuer defaults, becomes insolvent or goes into liquidation, bondholders with later priority claims will likely be exposed to higher risk than other bond or stockholders. Therefore, investors should first understand the terms of the bond, as well as priority claims in the event of default, insolvency or liquidation of the issuer.

Risk of credit rating changes

Independent credit rating agencies rate some bonds and classify them as "investment grade" or "non-investment grade." Credit ratings may be changed or terminated before the bond matures. Investors must continue to monitor the credit rating information of the bonds they invest in to ensure that the bonds are still suitable for investors. In this regard, we advise investors to check with their investment advisors.

Liquidity Risk

Bonds are mainly used as medium and long-term investment, rather than short-term speculation. Investors should be prepared to keep funds in the bonds throughout the investment period; if investors choose to sell the bonds before maturity, they may lose some or all of their investment.

The secondary bond market may not provide sufficient liquidity, or may be bought and sold at prices prevailing in market conditions rather than the prices expected by bondholders.

Credit risk

The interest and principal of the bonds are paid by the issuer. If the issuer defaults, the bondholders may not be able to recover the interest and principal. Bondholders bear the credit risk of the issuer.

Market Risk

The market provides indicative bond prices, and when market conditions change, bond prices fluctuate. Factors affecting bond market prices include, but are not limited to, fluctuations in interest rates, credit spreads and liquidity premiums. Yield fluctuations generally have a greater impact on the price of bonds with longer maturities. Buying and selling bonds results in losses rather than profits, which are inherent risks of bonds.

Interest Rate Risk

When interest rates rise, the price of fixed-rate bonds generally falls. Investors who wish to sell the bond before maturity may receive less than the price the investor paid for the purchase.
Non-Investment Grade Bonds or Unrated Bond Risk
Non-investment grade or unrated bonds have higher credit risk, and the issuer of such bonds has a greater chance of default risk. During an economic downturn, non-investment grade bonds or unrated bonds may be more vulnerable to price volatility as (i) investors become more risk-averse; and (ii) bond default risks increase; resulting in higher prices than investment grade bonds Bonds fell even more.

Exchange rate risk

There may be exchange rate risk if an investor chooses to convert the bond proceeds into another currency.

RMB risk

The renminbi is subject to foreign exchange controls, and even if the central government has given some relaxation, the renminbi is not freely convertible in Hong Kong. Foreign exchange controls by the relevant authorities may adversely affect exchange rates. If the central government tightens control, the liquidity of RMB and even RMB bonds in Hong Kong will be affected, and investors may face higher liquidity risks. Investors must have funds prepared to invest in bonds that will remain in bonds throughout the investment period.

Reinvestment risk

If investors fail to reinvest the interest they received at the same rate of return they purchased while holding the bond, this will affect the overall yield (yield) of the bond.

Early redemption risk

If investors hold callable bonds, when interest rates fall, the issuer may call the bonds before maturity. In this case, investors would have to reinvest the proceeds, while other bonds in the market at the time generally had lower yields.

Perpetual Bond Risk

Perpetual bonds have no maturity date, and dividends may be extended or even suspended according to the terms and conditions of the issue. Perpetual bonds are usually callable and/or subordinated and investors should be aware of their reinvestment risk and/or lower priority of claims (eg in the event of an issuer winding up).

Other risks

In general, bond trading involves a range of risks, including credit and settlement risks. Issuers, market makers or other relevant counterparties may not be able to meet their obligations on time. It is up to the investor to decide whether to invest in the bond. Investors should not invest in this product unless they believe that the product is suitable for investors to invest after carefully considering the product, taking into account their overall financial situation, investment experience and objectives, and risk appetite. Investors should definitely understand the nature and risks of the product and ensure that they have sufficient net assets to bear the risks and potential losses associated with the bond.