Category: Money Tips Date: 2006-10-17
Warrants is a leverage effect with the high-risk financial products, the view that once the warrants to institutional investors, liberalization will inevitably lead agencies to share price manipulation
Shanghai and Shenzhen Stock Exchange recently launched the "Interim Measures on Management Warrants" signifies that warrants the introduction of this innovative product to enter a substantive stage.
In the second batch of split share structure reform of listed companies, the China Yangtze Power (600.9 thousand quotes, information, advice, more), and Baoshan Iron & Steel (600019 market, information, advice, more) released on the price of the program in both the warrant contains provisions , investors should not invest in the warrants, what the risks? Once the warrants to institutional investors, liberalization would lead to institutional investors on the stock price manipulation?
The two companies have different programs
In fact, Yangtze Power's C of E does not belong on the price of the program measures, but the two tied together to vote. The warrants program, according to the shares of Yangtze Power Zhuanzeng equity as the base for all shareholders, to distribute 1.5 shares for every 10 copies of warrants, the issue price is 0 yuan / copy, line power ratio is 1:1. That a copy may be the exercise price of warrants to subscribe for a Yangtze Power shares, exercisable at a price of 5.5 yuan / share.
At the same time, the Yangtze River Three Gorges Project Corporation committed to the power controlling shareholders, in the warrant is exercisable for day, traded warrants entitling the holder to be held by the C of E to 1.8 yuan each, sold to Three Gorges Project Corporation, that is, Yangtze Power's C of E is to the company line rights; its implementation will increase the total share capital of Yangtze Power will be diluted earnings per share.
Baosteel price of the warrant program is part of one of the measures, that is, holders of tradable shares for every 10 shares of the shareholders will receive 2.2 shares of stock and the exercise price of 1 cent to 4.5 yuan, duration of subscription warrants for 378 days.
It is worth noting that the warrant holder the right line on the right lines and not to the Baoshan Iron & Steel, but the controlling shareholder of the company Baosteel Group, the right line, that is the right price and line by line in proportion to the right to purchase Baosteel Baosteel Group A shares. Therefore, Baosteel's warrants will not increase the company's total share capital, there was no line of the right of performance dilution, which is with the China Yangtze Power warrants are essentially different.
The risk of being manipulated are less likely to
The view was expressed that once the warrants to institutional investors, liberalization will inevitably lead agencies to share price manipulation. In fact, this possibility is relatively small.
At present the Shanghai and Shenzhen Stock Exchange's "Certificate Management Interim Measures," that could be the subject of shares traded warrants the eligibility requirements to implement the most stringent requirements. According to the "Interim Procedures" warrants listing of its shares of the underlying securities, the underlying shares are listed on the day of the application should meet the following conditions: the last 20 trading days the market value of outstanding shares is not less than 30 billion yuan; the last 60 trading days trading at 25% of total turnover; the outstanding shares of capital stock of not less than 300 million shares. At present, only 26 blue chips, with the conditions of issuing warrants, and therefore to some extent reduce the agencies share price manipulation possible.
"Interim Measures" also require the applicant listed on the exchange of the warrants shall not be less than 50 million copies; holds more than 1,000 investors in warrants shall not be less than 100 persons; from the date listed on the survival time of more than 6 months 24 months The following, etc.; require the issuer may not warrant issued by the sale of their warrants, the underlying issuers may not correspond to the sale of the underlying securities such as warrants, which further reduces the possibility of manipulation of the body.
In addition, regulators can strengthen warrants trading real-time monitoring, increase the enforcement of securities law and reduce the operation of institutions to share price.
Exchanges can be pre-set target of reasonable supervision, to warrant transaction price volatility or a serious departure from the underlying securities trading price, timely warning; pairs of unusual transactions in the relevant investor, can take a verbal warning, interview talk and other flexible regulatory measures; for the occurrence of significant abnormal trading in the securities account can be taken to limit trading warrants rigid regulatory measures; if there is suspicion of insider trading or market manipulation may be reported to the Commission for investigation and action.
Four kinds of treatment to warrant investment in
Need to be reminded that the warrant is a kind of leverage with the high-risk financial securities products, investors should be treated with caution.
First, we must strictly control the investment in the warrants positions. Warrants can not be the same position to look at positions in stocks, in particular, should avoid all of the funds are invested in warrants. Otherwise, good luck, of course, when a considerable profit, but if the direction of wrong judgments, losses will be relatively large.
Secondly, the investment warrants should strictly follow the principle of stop-loss. Once the stop bit should promptly withdraw from below and not wait for some sort of relief, or try to cover their short positions through the low share of low-cost.
Third, the warrant is more suitable for short-term investments as a species, position time normally should not be too long. As the warrants prone to sharp price fluctuations, thus the need for close attention to post-purchase warrants and the warrant itself, the underlying securities price movements, if not always stare plate, it should try to avoid investing in warrants.
Fourth, to warrant investment can not "get petty." In other words, do not just because the price of a warrant to buy low away. For some the price is only a few cents of the warrants (generally out of the money warrants), usually contains a great risk. As time goes by, unless it is the underlying prices of the securities substantially within a short inversion, otherwise the price of these warrants is easy to fall to zero.
