High discount subscription certificate is more cost-effective
Ping An Securities Derivatives Department Zhang Junjie
In 2007, China's warrant market as a whole operated well. Warrant products continued to play an important role in the securities market, and the warrant market has also become an important part of China's capital market. According to statistics, in 2007, the total transaction amount of China's warrant market reached 7.71 trillion yuan, including 3.88 trillion yuan of subscription certificates and 3.83 trillion yuan of put certificates. Compared with 2006, the turnover of warrants in 2007 increased by 287.44%, accounting for 16.94% of the total turnover of A-shares in the two cities over the same period.
In general, the warrant market in 2007 was a year of alternation between old and new. On the one hand, a large number of share reform warrants have expired and delisted; On the other hand, the new forces focusing on separately traded convertible bond warrants have been listed one after another. The data shows that there were 23 warrants due for delisting in 2007, including 11 subscription certificates and 12 put certificates; During the period, there were 8 warrants listed, 7 of which were subscription warrants, and only China Southern JTP1 was put warrant. By the end of 2007, there were 12 warrants still under trading in the warrant market, including 9 call warrants and 3 put warrants Wuliang YGC1 Except for the SFC2 of Shenzhen Stock Exchange and Shenzhen Stock Exchange, the rest are all convertible bond warrants with separate transactions.
With the alternation of old and new warrant varieties, hot spots in the warrant market are also emerging. Excluding the irrational surge of put warrants and the speculation of newly listed warrants, Wuliang YGC1, Maanshan Steel CWB1, Sinochem CWB1 and Yunhua CWB1 and other subscription warrants have all experienced an increase of more than 30% in two or three trading days, bringing large short-term gains to investors. From a long-term perspective, subscription certificates such as Steel Vanadium GFC1 and Wuliang YGC1 also saw a large increase throughout the year. Steel Vanadium GFC1 rose by up to 461.53% in the year, much higher than the positive shares Pangang Steel Vanadium 289.37%.
From the perspective of valuation, the valuation of warrants in 2007 is still seriously differentiated. In terms of warrants, some deep price share reform warrants continued to show a high discount, such as Wuliang YGC1, with a premium rate of less than - 10% for a long time. However, newly listed equity warrants have a high premium rate, such as Shenzhen High CWB1, Guoan GAC1 and other warrants, which once exceeded 90%. The premium rate of the put warrant continues to be high because it is out of the depth price. For warrants with high discount, if investors are optimistic about the trend of positive shares, it is more cost-effective to buy warrant. On the one hand, the cost of buying such warrants is lower than that of directly buying positive shares; On the other hand, such warrants usually have good resilience. For warrants with a high premium rate, the trend may deviate from the regular stock, which is risky. Investors, especially medium - and long-term investors, should avoid it. The put warrants are all out of the deep price and have no value basis. There is no doubt that they will eventually return to zero. Investors should try not to participate in the speculation of the put warrants.
Looking forward to 2008, as some listed companies issue separately traded convertible bonds, the warrant market will continue to inject fresh blood, and covered warrants issued by securities companies are expected to be launched in 2008, and China's warrant market will further integrate with the international market. For warrant investors, there are still good opportunities in 2008. Steel warrants and warrants with high negative premium are still worthy of investors' attention.
