□ Li Jin, Director of Faxing Securities (Hong Kong) Co., Ltd
Recently, the hot topic in the Hong Kong stock market is about when A-shares will bottom out. After a substantial adjustment in recent months, A-shares have begun to attract the attention of international funds and ordinary investors. As a retail investor, if you want to simply and directly invest in the mainland stock market, you will usually consider some A-share investments or products whose performance is linked to the A-share market, such as the A50 China Fund (02823. HK) listed on the Hong Kong Stock Exchange. Recently, some enterprising investors bought the warrants of the A50 China Fund, which greatly increased the transaction of relevant warrants and street products (market holdings).
The author found that the most active A50 subscription certificates in the market recently were: first, the exercise price was on the high side, and some of them exceeded the price by 40%; Another characteristic is that the duration of the year is very short, with only two more months left. The daily time value loss is more than 5%, and the risk is very high.
From the perspective of street goods, two of the A50 subscription certificates with more capital inflow last Friday are also some short-term and medium-term foreign securities, and there are many street goods, more than 40% and 80% respectively. It can be seen that many investors are quite aggressive when choosing A50 warrants, and are willing to choose some high-risk warrants.
However, the author also estimated that some of the investors did not know the characteristics of the A50 warrants they bought. The reason why they bought the warrants was either because of the large transaction of warrants or the surge of people, or because they only focused on the high leverage of warrants, so they chose some short-term, in-depth out of price, high street A50 warrants. However, they do not know that when they see the wrong direction, such high-risk warrants will fall very quickly. Even if the positive shares stabilize or rise slightly, the warrants may continue to fall because of the more urgent time value loss.
Therefore, if investors are still optimistic about the future performance of the A50 China Fund, it is appropriate to consider some longer term (4-6 months) and less expensive (exercise price below HK $20) warrants for a more robust strategy. In addition to short-term speculation, such warrants are also suitable for midline investment.
