Shanghai Stock Exchange: Baosteel Warrant "Overall Success"
http://www.sina.com.cn 08:19, September 5, 2006 Economic Information Daily
Xinhua News Agency, Shanghai, September 4 As the first warrant launched in the A-share market since the start of the split share structure reform, Baosteel Warrants ( information quotation forum ) It has completed its historical mission. Liu Xiaodong, Deputy General Manager of Shanghai Stock Exchange, said in an interview with Xinhua News Agency on the 4th that Baosteel Warrants "have been successful on the whole".
According to the information from the Shanghai Stock Exchange, the overall trading process of Baosteel warrants was stable during the duration of the warrants, which overcame technical difficulties such as large trading volume and intraday turnaround trading. There were no technical failures and no flaws in information disclosure. On the exercise date of August 30, 5.54 million Baosteel warrants were finally exercised in 221 accounts, and the exercise process was reasonable.
Liu Xiaodong said that as the first stock reform warrant, it is of great significance for Baosteel Warrants to complete its historical mission. First of all, the birth of Baosteel Warrants strongly supported its share reform and set a model for other companies' share reform, enabling some companies with difficulties in using other payment methods to find new ways of consideration, thus promoting the process of share reform.
Secondly, the warrants form a certain support for the regular shares. Statistics show that the stock prices of companies issuing warrants in Shanghai and Shenzhen stock markets have risen by 9.45% on average in the 10 trading days before the issuance of warrants.
Third, warrants have activated market transactions. The emergence of warrants has promoted the active trading of positive shares to a certain extent, and as an innovative product, warrants have also been welcomed by investors. Since its birth one year ago, the warrant market in mainland China has become the second largest market in the world.
Fourth, Baosteel's warrants are small in size, low in market value, and T+0 transactions pose unprecedented challenges to regulation. SSE has designed a series of monitoring indicators for this purpose, and has twice taken punitive measures against a business department and a personal account with abnormal transactions. From T+0 turnaround trading to investor cultivation, from market supervision to risk control of securities firms, Baosteel Warrants have accumulated valuable experience for further product innovation.
Liu Xiaodong disagreed with the view that "no exercise of warrants equals a piece of waste paper". He said that warrants themselves have many functions, such as being a tool for risk hedging and discovering market expectations. Exercise is only one of its functions, and other functions of warrants cannot be denied simply because there is no exercise. In mature markets, there are also a considerable proportion of warrants that cannot be exercised after expiration. From this point of view, it is unscientific to discuss the success or failure of the exercise theory.
When talking about whether warrants will have a "bloodletting" effect on the market, Liu Xiaodong said that the fact proved that warrants not only did not form a capital diversion to the stock market, but also promoted the activity of the stock market. Statistics show that Baosteel shares One month after the issuance of warrants, the trading volume is significantly higher than that before the issuance of warrants. At the same time, the number of shares in the accounts of warrant holders has also increased. In addition, the creation of warrants will also bring demand for stocks, so the role of warrants on the stock market should be positive.
Liu Xiaodong said frankly that Baosteel's warrants did have some problems, such as the high exercise price, the small number of issues, and the long term in the design of warrants. More importantly, because there is no supply and demand balance mechanism introduced, the supply cannot keep up when the market demand is very large, which to a certain extent led to the long-term sharp deviation of the warrant price from the theoretical price and the phenomenon of excessive speculation in the market.
Background link
As the first warrant issued since the share reform, Baosteel's warrants had just gone through a whole year from August 22, 2005 to the last trading day on August 23, 2006.
Once listed, Baosteel's warrants were speculated above 2 yuan, and since then the turnover rate in a single day has often exceeded 400%. In the market, Baosteel warrants can rise by 30% or fall by 30% in one day.
On May 19, 2006, Baosteel's warrant reached a maximum of 2.38 yuan. On August 23, Baosteel Warrants ended the last transaction with a one-day decline of 85.78%, and the price was only 0.031 yuan. According to the scale of 387.7 million warrants, the market value loss of Baosteel's warrants from the highest point was up to more than 900 million yuan.
Reporter: Pan Qing
