Hong Kong Report
Our reporter Yu Xiaona
On March 12, the Hong Kong warrant market will break another barrier. A number of warrant issuers (known as the "wheel" in the Hong Kong market) will first issue warrants with A50 ETF (Exchange Traded Fund, 2823. HK) as the subject matter, and Hong Kong investors have made another major breakthrough in participating in the mainland stock market.
The reporter learned from many international securities companies that at that time, Hong Kong will have 19 warrants of at least 9 foreign securities companies listed on the same day, which can be described as a great sight.
It is reported that a number of major rotation operators in the Hong Kong market, including Societe Generale, Macquarie Securities, Goldman Sachs, UBS, France and Pakistan, HSBC, have participated in the launch of the A50 China Fund.
The reason why the issuance of A50 China fund warrants is so eye-catching is that it will be the first securities derivative product related to the mainland stock market in Hong Kong, while the Xinhua FTSE A50 China Fund itself is the first mainland stock market concept fund in Hong Kong that can be participated by retail investors.
The fund is an index fund based on the Xinhua FTSE A50 China Index, and its constituent stocks include the 50 stocks with the largest market value listed in Shanghai and Shenzhen shares 。
Brokers revealed that, in fact, since the second half of last year, when the mainland stock market was in full swing, Hong Kong brokers have constantly received inquiries from investors about how to participate in the mainland stock market investment.
At that time, Li Songci, the executive director of Goldman Sachs and the "Queen of Wheels", also said in an interview that Goldman Sachs was very interested in issuing mainland stock warrants and had begun to study relevant operations.
Li Songci revealed that the biggest problem for the round traders in issuing mainland stock warrants was hedging. Due to regulatory restrictions, most of the securities traders could not directly trade A-shares. Even the securities traders with QFII quota, such as Goldman Sachs, could not be used for hedging the issuance of warrants because the quota was "precious". In addition, In addition, the A-share stock index futures have not been launched for a long time, so for Hong Kong wheel traders, besides the high cost of issuance and hedging, there are also great technical obstacles.
It is for this reason that this issuance of A50 China Fund Warrants is regarded as the "preparatory action" for Hong Kong Underwriters to issue a single A-share warrant in the future.
"Generally speaking, we will issue warrants of relevant stocks only after the market demand and trading volume of positive shares have reached a certain level. But this time, investors are very concerned about this product, so we first send one out to see how the market responds, and then make other comments." Li Jin, senior vice president of derivatives of Societe Generale Securities, told reporters.
According to the issuance details of different brokers obtained by the reporter, 19 of the A50 China fund warrants were all subscription warrants, reflecting that the investors are generally optimistic about the A-share market. From the perspective of the maturity date, it ranges from September this year to December next year, ranging from 55% to 90%.
Since the listing of A50 China Fund at the end of 2004, the trading volume has not been large. Only when the concept of China became popular in the second half of last year, did A50 China Fund begin to rise with the market. Recently, the stock price has risen significantly.
For wheel traders, insufficient trading volume is a big taboo, which will directly lead to whether they can achieve hedging. Brokers also have concerns about the upcoming A50 China fund warrants.
"If after the issuance, the market reaction is very enthusiastic, but the trading of the regular shares is not strong enough, for example, if the trading volume of the warrants reaches 5 or 10 times of the regular shares, we will have difficulties in hedging." Li Jin said that in the past, the average daily trading volume of the A50 China Fund was about 200000 shares, while if the trading volume of the warrants reached 1 million shares or more after the listing, Wheel traders may face hedging pressure.
As for whether the listing of the warrant will have an impact on the price convergence of the two stock markets, most of the round traders said that because it is still in the initial stage and the scale is not large, the influence may be minimal, and everything can only be judged after the A-share warrants can be issued.
"At least for the moment, it seems that A-share price has a greater pull on H-share price", Li Jin said.
Related reports: Hong Kong will launch 19 A-share warrants next week
The first A-share warrant in Hong Kong will be launched in early March at the earliest
