Category: Money tips Release Date: 2007-04-18
Editor's note: According to authoritative information related to the latest statistics show that from January to May this year, Hong Kong continues to maintain the world's largest warrants market turnover position, with a total turnover of 618 billion Hong Kong dollars, higher than the second place in Germany 37%.
Statistics indicated that during the first half of this year, the Hong Kong warrants daily average turnover of 6.2 billion Hong Kong dollars, accounting for 19% of big city, the total turnover, the Hang Seng Index warrants are still the most popular warrants market, and this year the first week of July CCB warrants turnover ratio reached 7%, compared with 3% of the proportion of HSBC Holdings is also a high tide in due course of this unit is blowing in the Mainland of Lights is an indisputable fact that this strong wind so why leave it on the reason in detail solutions related to the terminology now temporarily out Chen.
"Warrant" leveraged investment vehicles, also known as warrants warrants in Hong Kong, commonly known as "Warrant" usually refers to warrants warrants say. Warrant is a right, not a liability. Scheduled to give holders of its "expiry date" to a predetermined "exercise price" to buy or sell the underlying assets (stock, commodity, index or currency, etc.) the right stipulated in the stock warrants are often referred to as "underlying stock "or" foundation stock. " Warrants have many of the characteristics of derivative products, it is also a very good leveraged investment instruments.
Two types of issuers Warrants
Warrants by the issuer can be divided into two categories: Equity Warrants (EquityWarrant) and covered warrants (DerivativeWarrant, known as the derivative warrants in Hong Kong). Equity warrants are usually issued by the listed companies themselves, or through brokerage firms, investment banks and other financial institutions issue, the underlying assets, usually listed company or its subsidiary's stock. Equity warrants are usually given to warrant holders at the appointed time for the agreed price for the rights of shares of listed companies, at present the vast majority of equity warrants are European-style warrants. Arrive at the appointed time, if the current stock market price is higher than the exercise price of warrants, then the warrant holders will be asked to purchase the stock from the issuer and the issuer through the issuance of warrant holders in the form to meet the demand.
Covered Warrants face hedging
Covered warrants are issued by a person other than the underlying assets of a third party (usually reputable brokerages, investment banks and other large financial institutions) issued warrants, the underlying assets for individual stocks, a basket of stocks, indices, and other derivative products. Covered warrants for European or American, the holder's rights may be to buy or sell the underlying asset. Operation of covered warrants and equity warrants the exercise of essentially the same, different, the delivery method could be the stock may also be the difference in cash. If it is the stock delivery mode, when the holder to exercise the right to buy shares, covered warrants issuers need to buy shares from the market (or his original holdings of stocks) to sell warrants holders; when the holders exercise to sell the stock right, the exercise price of the issuer must buy the stock. Therefore, covered warrants issuers bear the risk, need some hedging instruments to hedge.
Option important financial instruments
In accordance with the definition of the American Stock Exchange, options (option) is a kind of agreement in the specified time or specified price within a specified period of time the sale of the underlying asset's rights. As can be seen from the definition, the C of E is essentially a kind of option, the United States is to pay the warrants as an option to define it. In addition to some differences on the mode of operation, warrants and options is almost a general sense there is not much different. The following table shows equity warrants, covered warrants, options comparison. Warrants (Warrant) is the issuer and the holder of a contract between the holder at the appointed time, the right to agree a price to buy or sell the underlying asset.
In addition, it is worth noting that, due to the C of E (in particular, covered warrants) the nature of options, making it the existence of a mutually exclusive option, which is in Hong Kong and the U.S. market have been the performance. In Hong Kong, individual stock options was introduced in 1995, the turnover has been low, partly because of the time warrants released earlier has been a large number of possession of the Hong Kong market, also because of the structure and operation of their options are relatively complex and can not be investors will be attracted to the option warrants here. In the United States on the contrary, the development of options markets mature, retail investors accounted for more than half of the options market turnover, options have become the American investors hedge risks and benefits of an important expansion of financial instruments. This is also the warrants market in the United States developed an important reason.
The right to the future of the next two warrants in accordance with the rights of warrants can be divided into different �warrants and put warrants �which warrants the indicator to buy out the rights of future warrants �index put warrant is the right to sell out the future line of the right in accordance with warrants �patterns of different �warrants can be divided into European and American warrants warrants warrants �where Continental is the only contractual rights may be exercised due date �referred to as "line of power" American-style warrants warrants �is defined as any time before the expiration of the right line warrants.
