Why does the evil flower of warrant bloom

Invalid market but still crazy popularity

Even a piece of waste paper can be stir fried. However, the superficial prosperity is all about making wedding clothes for others. As the last put warrant in the era of A-share reform, the ups and downs of the put warrant of China Southern Airlines not only exposed the monkey like side of A-share speculative culture, but also highlighted the creation myth of an unbeaten primary market once again, and made the policy baton for regulating the market several times questioned on the principle of "fairness, impartiality". Furthermore, China Southern's put can be regarded as a typical specimen of A-share market failure, policy disorder and people's disappointment.

When a put warrant with an intrinsic value of zero and a deep out of price (that is, when the execution price of the purchased warrant is far higher than the market price of the stock, the intrinsic value of the warrant is zero, but as long as the warrant has not expired, it still has a time value - Editor's Note), it is chased by billions or even tens of billions of dollars every day. There is no doubt that the market is invalid. Since landing on the Shanghai Stock Exchange on June 21, 2007, China Southern Airlines has sold nearly 2.4 trillion yuan in more than 200 trading days, and the turnover rate is hundreds of times. This kind of transaction data, which can almost apply for Guinness Book of Records, creates a "black hole of selling gold" that is against time and whose value must return to zero.

Struggling in a bubble doomed to speculation, the right people still have to face enormous uncertainty - the constant revision of the rules of the game, the high opacity of the revision process and the imbalance of interests in the formulation of rules. Since the birth of Baosteel's warrants, the sudden decline of warrants due to changes in the news has caused many experts to break their wings. The introduction of the temporary trading suspension system in the session made the fluctuation of the warrant itself meaningless. From the frequent and even unlimited creation of securities companies to the sudden cancellation of collective repurchase of securities companies, it seems that, on the surface, it is just like the "fog scene" described by American poet Sandburg. It is just "the fog is coming, and the kitten's feet are creeping. It sits quietly, looks carefully at the port and city, and then walks away". However, the huge interest competition and redistribution of the cake behind it made some "first movers" snicker.

As the right people who created huge turnover, they collectively played a fool role in the self smart speculation, not only providing huge trading commissions for the securities firms, but also being "squeezed" by innovative securities firms for a huge amount of innovation income - although this is only a return without any investment risk and innovative technology content.

Excessive imbalance between supply and demand makes the market malfunction

In the A-share market, the crux of the problem lies in the management's control over the number and rhythm of circulating capital stock in the issuance and refinancing of new shares, which leads to excessive premium of circulation rights, whether it is the "big and small non" share reduction, which is called "barrier lake" by the media, or the huge amount of refinancing, which is regarded as a scourge by the market. Similar cruxes have also magnified the speculative risk in the small warrant market.

If the turnover is taken as an indicator of market popularity, the warrant market is almost a boiling place. according to Haitong Securities According to statistics, the average daily turnover of Shenzhen and Shanghai warrant markets in 2007 was 14.56 billion, with an average daily turnover of 32.16 billion yuan, up 88.63%% and 77.06% respectively from 2006. The abnormally high turnover rate made the Shenzhen and Shanghai warrant markets, which had only 26 varieties at most, set a record of 7782.8 billion yuan in total transactions in 2007. In contrast, the Hong Kong warrant market has more than 5000 trading varieties. In 2007, the total transaction volume was only HK $4.7 trillion, while in 2006, it was only HK $1.8 trillion, which is quite doubtful that "nothing can be seen from nothing".

However, in addition to creating commissions to work for securities companies, excessive trading has not brought huge profits to the rights people. The key reason is that too much capital is chasing too few warrants, leading to most warrants being in place at one step after listing. When the right people buy in the secondary market, they have to pay a very high premium cost, which sets a very high profit threshold for the latecomers. It is generally judged that in the put warrant market, only one person in 100 may make money.