In the rebound of the market yesterday, 10 warrants outperformed the corresponding equity warrants Vs. Who should buy when the equity market turns warmer?
Ping An Securities Comprehensive Research Institute Hua Jianqiang
The Shanghai and Shenzhen market rebounded in shock yesterday. The Shanghai Stock Exchange Index closed at 3761.61, up 92.71 points or 2.53% from the previous trading day. In the warrant market, the subscription sector was in full swing, while the put warrants continued to decline.
All parties in the market are arguing over whether the stock market has bottomed out and started to warm up. What we are concerned about is that if the market really starts to warm up, when allocating assets, should investors who also pay attention to the derivatives market put limited resources into the equity market or the warrant market? In other words, if the market starts to strengthen, who will perform better in warrants and equity? In this regard, we believe that the warrant market may have relatively greater opportunities.
First, in theory. As a kind of financial derivatives, warrants usually have a certain leverage effect in terms of their price performance relative to regular shares. Of course, the level of leverage depends on the price of regular shares, exercise price, exercise ratio and other factors. In a strong trend market, the performance of warrants is generally better than that of regular shares in theory.
Secondly, from the perspective of practice. Let's briefly review the performance of warrants and positive shares during the market rebound next Wednesday. We can find that in the subscription sector yesterday, except for one suspension, 10 warrants rose more than their corresponding positive shares, and 4 warrants were slightly less than their positive shares. On the whole, warrants performed better than positive shares on Wednesday.
Third, from the perspective of transaction characteristics. At present, the transaction cost of the warrant market in China is lower than that of the regular stock market, the rise and fall limits of the warrant market are large, and the warrant market adopts the T+0 trading mode. These characteristics are conducive to the activity of the warrant market to a certain extent, especially in the rising market, which can attract more attention from funds.
Let's look at the specific operation. Although the overall opportunity of the warrant market may be higher when the stock market turns warmer, the performance of different varieties in the same market varies greatly. How to choose the right variety is the key to success. First, look at Wednesday's trading. Yesterday, with the exception of the suspension of Jiangxi Guangdong CWB1, almost all the new warrants listed in recent months performed better than the corresponding regular shares. Another feature that needs attention is that ZTE ZXC1 and Rizhao CWB1 Relative to their corresponding regular stocks, they rose 5.24% and 4.15% respectively, and the common characteristics of these two varieties are that the circulation volume is small, the cumulative increase of corresponding regular stocks in recent months is small, and both of them are new warrants. Therefore, when selecting varieties, investors can focus on the sub new subscription certificates, especially the sub new varieties with small circulation and large future potential of regular shares.
Of course, warrant investment has disadvantages compared with equity investment. Firstly, the warrant market in China is not very mature at present, and the extended volatility and premium of some varieties are high, which leads to the low correlation between warrants and equity; 2、 The warrant market is small, and institutional investors are not active in participating; 3、 As a double-edged sword, the T+0 trading mode may also increase the short-term volatility of the warrant market, thus increasing the investment risk of investors; 4、 The warrant itself has the risk of time value decreasing day by day.
To sum up, if the market starts to warm up, the market opportunity of subscription warrants may be greater than that of regular stocks. However, while the expected higher returns, the higher investment risks cannot be ignored.
