Bull and Bear Certificate is a structured product, which can track the performance of related assets without paying the full amount of assets actually purchased. Bull and bear certificates are divided into bull certificates and bear certificates, and have a fixed expiration date. Investors can be optimistic or pessimistic about related assets and choose to buy bull certificates or bear certificates. Bull and bear certificates are issued by a third party, usually an investment bank, and have nothing to do with the Hong Kong-China Stock Exchange and related assets.

In some overseas markets, the listed products equivalent to the bull-bear certificate are generally called "knock out" or "stop loss" bills, and the unlisted products equivalent to the bull-bear certificate are generally called "contracts for differences" (CFD for short).

There are conditions attached to the issuance of the bull-bear certificate: within the validity period of the bull-bear certificate, if the relevant asset price reaches the level specified in the listing document (called "recovery price"), the issuer will immediately withdraw the bull-bear certificate. If the relevant asset price touches the recovery price before the expiration of the bull-bear certificate, the bull-bear certificate expires in advance and the transaction is terminated immediately. It is no longer valid on the original expiration date of the listing documents.

Bull and bear certificates are valid for 3 months to 5 years and will only be settled in cash. During the trading hours in the spot market of China Hong Kong Stock Exchange, the bull and bear certificates are traded through AMS/3.

Main characteristics of bull-bear syndrome

1. The price trend of bull-bear certificate tends to be close to the price of related assets-the price change of bull-bear certificate tends to be close to the price change of related assets (that is, the hedging value is close to 1). Therefore, if the value of related assets rises, the value of bull certificate with equal equity ratio will generally rise near equivalence, while the value of bear certificate with equal equity ratio will generally decline near equivalence. This feature provides investors with a product that can closely track the price trend of related assets, and the price transparency is higher than other structured products.

However, when the price of the assets related to the bull-bear certificate approaches the recovery price, the price change of the bull-bear certificate may fluctuate greatly, even out of proportion to the price change of the related assets.

2. Bull and bear certificates have a recovery price and a compulsory recovery mechanism-the recovery price of bull certificates must be equal to or higher than the exercise price, and the recovery price of bear certificates must be equal to or lower than the exercise price. If the relevant asset price touches the recovery price at any time before the expiration, the Bull Bear Certificate will expire early and must be withdrawn by the issuer, and its transaction will be terminated immediately. The whole process is called "forced recall event".

3. Types of Cow-Bear Syndrome-There are two types of Cow-Bear Syndrome: N type and R type.

(1) N-type bull-bear certificate refers to the bull-bear certificate whose recovery price is equal to the exercise price. Once the relevant asset price touches or exceeds the recovery price, the holder of the bull-bear certificate will not receive any cash payment.

(2) Class R bull-bear certificate refers to the bull-bear certificate with different recovery price and exercise price. In the case of compulsory recovery, the holder of the bull-bear certificate can recover a small amount of cash (called "residual value"). But in the worst case, there may be no surplus value. (See point 5 on determining "surplus value")

If we compare the N-type bull-bear certificate and the R-type bull-bear certificate with the same exercise price, the R-type will be withdrawn at an earlier price level.

4. Maturity value-If it is not recovered before maturity, the bull-bear certificate can be held until maturity, or sold at the trading hours of the exchange before maturity.

(i) For the bull certificate, if it is held until the normal maturity date, the cash settlement will be the positive difference between the settlement price (determined on the appraisal date) and the exercise price of the relevant assets.

(ii) For the bear certificate, if it is held until its normal maturity, the cash settlement will be the positive difference between the exercise price and the settlement price (determined on the valuation date) of the relevant assets.

In the case of Hong Kong stock bull-bear certificate, the settlement price will be based on the closing price of the relevant assets on the last trading day. Take the Hong Kong Stock Index Bull Bear Certificate as an example, the settlement level is the same as that of the expired index futures contract. If the difference between (i) and (ii) above is negative, investors will not receive any funds.

5. How to determine the residual value of the R-type bull-bear certificate-when the R-type bull-bear certificate is withdrawn, its residual value is the positive difference between the settlement price and the exercise price determined according to the terms of the listing documents. The settlement price of cattle certificate shall not be lower than the lowest transaction price of related assets from the forced recovery event to the next trading period *. On the contrary, when the R-type bear certificate is withdrawn, its residual value is the positive difference between the exercise price and the settlement price determined according to the terms of the listing documents. The settlement price of the bear certificate cannot be higher than the highest transaction price of the related assets from the forced recovery event to the next transaction. Pre-trading session and morning trading session are regarded as the same trading session. However, in the worst case where the settlement price touches or exceeds the exercise price, there may be no residual value.

* If the continuous trading time in the next trading session is less than 1 hour, the settlement price will be postponed to the next trading session.

Relevant assets eligible to issue bull and bear certificates.

At the initial stage of issuance, the issuer may apply for issuing bull-bear certificates for the following related assets:

1. Highly liquid Hong Kong stocks listed on the exchange: HSBC Holdings, Hutchison Whampoa, PetroChina, China Mobile and Cheung Kong Industries;

2. Two Hong Kong stock indexes: Hang Seng Index and Hang Seng China Enterprises Index (H-share index);

3. Overseas stocks and overseas stock indexes;

4. currency; and

5. Commodities

After consulting and obtaining the approval of the Securities and Futures Commission (SFC), more relevant assets may be added from time to time in the future. , reference: ex/prod/cbbc/info2_c, invest in "Niu Zheng" and be optimistic about the market outlook. Instead, you can choose "bear card".

The price change rate of bull-bear certificate and related assets is 1 to 1.

At any time before the expiration of the bull-bear certificate, if the stock price hits the recovery price, the issuer will resume and terminate the trading of the bull-bear certificate and return the remaining amount (if any), commonly known as shooting. ,