Skip to main content

H-Shares Warrants

Referring back to my postings on 8 June 2007 on H-shares, and 6 June 2007 on the H-shares covered warrants listed on KLSE: the rerating and catalysts favouring H-shares are coming true fast. Warrants on the H shares of mainland companies gained a substantial portion of the Hong Kong warrant market in the second quarter as the turnover of the market continued a surge that is destined to set a record for the year.

The H-shares warrant market in HKSE is the most active in the world. (H-shares are mainland companies listed in HKSE.) Turnover of all warrants in the Hong Kong market totaled HK$1.36 trillion for the first half, a growth of 81 percent compared to the same period last year. It also represents 76 percent of the total of HK$1.79 trillion for the whole of 2006. If turnover in the warrant market continues to grow at a comparable rate in the second half, turnover for the whole year could surge to HK$2.72 trillion.

Turnover in H-share warrants picked up substantially in June, with daily turnover mostly staying above 60 percent of total warrants turnover. This contrasted with January 2006 when H-share warrants were only around 30 percent of turnover. Investors chased warrants on PetroChina (0857), which overtook those of China Mobile (0941) as the third most active warrants in the market in the period after Hang Seng Index and China Life (2628) warrants.For the first half, China Mobile still held the third place, followed by China Construction Bank (0939) and ICBC (1398).

Considering that there were ONLY only 26-30 H-shares warrants issued, its an astounding surge in interest. Again, backing up these buying interest:

a) There still exists a huge gap in Shanghai listed shares compared to the H-shares in HKSE of about 20%. This discount gives buyers a great buffer.

b) The discount is bound to narrow due to the quick activation of QDII scheme, which will allow Chinese funds to buy into H-shares directly.

c) The discount is bound to narrow with Beijing authorities wanting the top few companies to shift their H-shares back to mainland. This is to provide for more shares and investing options to satisfy mainland investors. To initiate such a move, there could be a total buyout of the H-shares prior to reselling in Shanghai.

d) The climbing euphoria levels and feel-good factor following the celebration of 10 year reunification, in particular Beijing's statements supporting the financial development of HK: all played a part in the rerating exercise.

A long way for the covered warrants to run.


Puntamentalist said…
Why are you recommending these H-shares warrants on Bursa but not the similar ones in Hong Kong. Notice your HK selection does not include such underlying as well?
some of the conversion ratios are ridiculous. at 50:1 i think the issuers are a little bit too 'kiasu'.
Salvatore_Dali said…
As 70% of more of the readers of this blog are from Malaysia, it is only fair to see things from their point of view. I guess I should recommend all H-shares (there are not that many listed there anyway), I hope I did mention that of all the H-shares, the ones I prefer are the top 5 biggies, inclusive of China Mobile, PetroChina, PingAn and the banks of course.

yes, conversion ratios are ridiculous and i have vented my anger at the houses issuing them before, but nobody seems to think its important

Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.

My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.

I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.

My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

PUC - An Assessment

PUC has tried to reinvent itself following the untimely passing of its founder last year. His younger brother, who was highly successful in his own right, was running Pictureworks in a number of countries in Asia.

The Shares Price Rise & Possible Catalysts

Share price has broken its all time high comfortably. The rise has been steady and not at all volatile, accompanied by steady volume, which would indicate longer term investors and some funds already accumulating nd not selling back to the market.

Potential Catalyst #1

The just launched Presto app. Tried it and went to the briefing. Its a game changer for PUC for sure. They have already indicated that the e-wallet will be launched only in 1Q2018. Now what is Presto, why Presto. Its very much like Lazada or eBay or Alibaba. Lazada is a platform for retailers to sell, full stop. eBay is more for the personal one man operations. Alibaba is more for wholesalers and distributors.

Presto links retailers/f&b/services originators with en…

How Long Will The Bull Lasts For Malaysia

Are we in a bull run? Of course we are. Not to labour the point but I highlighted the start of the bull run back in January this year... and got a lot of naysayers but never mind:

p/s: needless to say, this is Jing Tian ... beautiful face and a certain kind of freshness in her looks and acting career thus far

I would like to extend my prediction that the bull run for Bursa stocks should continue to run well till the end of the year. What we are seeing for the past 3 weeks was a general lull where volume suddenly shrunk but the general trend is still intact. My reasons for saying so:

a) the overall equity markets globally will be supported by a benign recovery complemented by a timid approach to raising rates by most central banks

b) thanks to a drastic bear run for most commodities, and to a lesser extent some oil & gas players, the undertone for "cost of materials" have been weak and has pr…