Category: Money tips Release Date: 2006-08-14
â–?Moderator Sun Hua Moderator: Yesterday, the Shanghai and Shenzhen Stock Exchange launched the "Certificate Management Interim Measures," a formal declaration of warrants trading interruption for nearly 10 years later, again in the mainland stock market debut. Do you think that warrants the re-launch what is the point?
Hu Hong-mei: warrants occurred 10 years ago, when the Hunan Zhongyi warrants, Yueda warrants, Haifa warrants allotment of warrants is the best example of just a single species due to warrants, as well as the value of discovery was the lack of warrants reduced to speculation tool, ups and downs and eventually fade out of the A-share market, but are not saying that the C of E is not a good investment tool, but can only say that the A-share market was not suitable for introduction of warrants. Because in the global capital market, the warrants is an extremely popular trading tool, the most typical of the German Stock Exchange, as of the end of April this year, only 797 listed companies, but over the same period the number of listed derivative warrants as high as 32276, can be seen Warrants charm.
Moderator: Do you give small and medium investors to explain the concept of warrant, please?
Hu Hong-mei: warrant is a kind of stock options, on the HKEx is called "Turbo" (warrant). Holders of warrants are within the required period or a specific expiration date, shall be entitled to the agreed price (exercise price) to the issuer to buy or sell the underlying stock, or to receive a cash settlement of the securities clearing price difference. Warrants can be divided into call warrants and put warrants. Holders of warrants who may be within the required period or a specific expiration date, to the issuer to buy the underlying stock, with the current popularity of convertible bonds have the right to convert into shares similar; while put warrants held by the rights of being able to agreed to sell the underlying stock price.
Moderator: China will launch several warrants program?
Hu Hong-mei: It is understood that three warrants had been proposed to include: 1, Transmission and Distribution in batches warrants program; 2, a Transmission and Distribution warrants program; 3, put warrants program.
Moderator: What do you think the C of E is a kind of investment products? Investment Warrants to note where the risk?
Hu Hong-mei: Warrant is a kind of high-risk, high-yield investment products, its risks and benefits are far greater than the stock. Because duration warrants are generally for 3 months to 18 months, once the expiry of the subsisting rights or for other reasons due to line disappear, while the stock that they do not withdraw from the market can continue to survive, even if the delisting to the three panels, there may be every shares a few cents or a few cents, while the warrant expires not work right or not a settlement on the worthless. Of course, the benefits warrants also high, in the strong leverage effect, the Warrants from time to time may reach hundreds of thousands of profit-fold.
For example: a listed company, the current market price of 10 yuan, issued warrants in the secondary market trading price of 0.5 yuan, distribution contract requirement, for investors in the six months after the price of 9 dollars to buy the company's stock, So, the stock price after 6 months to be 9.5 yuan, investors can profit, but if six months later, the stock fell because the market slowdown, the price is only 8.5 yuan. So, investors warrants to purchase 0.5 yuan on all the losses, and the extent of the loss is 100%. However, if after 6 months due to a substantial increase company performance and other factors, the stock price reached 13 yuan, then the book value of shareholders investment in warrants is 13 yuan revenue minus 9.5 yuan, equivalent to 3.5 yuan, Investors also equivalent to 0.5 yuan in the six months prior to the purchase of the warrants, six months later, the return is 3.5 yuan, up 700% yield. Over the same period it is impossible for investors to buy the stock losses of 100% or 700% of the profits.
Investors can also choose to directly sell the warrants, without having to stock trading. For example, an investor with 10 million yuan, according to market value of only 10 yuan to buy one million shares. However, use of the same money they can buy 200,000 copies of warrants, when the stock price rose after the price of warrants will be followed up, and the warrants do not need to pay stamp duty on transactions, transaction costs far less than the stock.
Retail investors must not use all of the money into the speculation in the future warrants to prevent the drain. In fact, the warrants can be used as a hedging tool. For example, you hold one million shares of a stock, you then only a small amount of money to buy the stock to see an empty option, so that when the stock up, you can stock profits to pay a little something to buy warrants the cost of When the stock down, you can retrieve the warrants on the stock investment losses incurred. This is the same as the logic futures investments. It can bring many benefits to investors, used improperly, it also makes investors go bankrupt.
Moderator: What kind of warrant being taken way to trade?
Hu Hong-mei: In the warrant transactions, the provisions of warrants use of auction transactions. Warrants survival after listing the number in circulation prior to the expiry î–?than 10 million copies of the î–?only participate in a daily call auction; warrants the sale of single declaration of the number of no more than 100 million copies of î–?declared the smallest change in unit price of 0.001 yuan. The number of warrants to buy to declare an integer multiple of 100; have traded warrants î–?qualified institutions can create the same kinds of warrants. Warrant transactions will be taken to T +0 way, the day the day you can buy the warrants î–?sell price limit is also larger than the corresponding underlying stock. The day the subject line of the right to obtain securities î–?times a day can be sold.
