Tuesday, October 23, 2007


A Price For Everything

TradeSter said...
On first trading day of Zijin-C1, the mother share closed in HK at HKD12.52, exercise price is HKD10.90 (convert to MYR by multiply currency rate 0.435), ratio 20:1, seems like my calculation for Zijin-C1 comes to very high premium 50-53%. Anyone can verify this high premium thingy on the 4 newly issued warrants today?
10:21 PM
Hedge Fund said...
Prop desk manipulation. Beware!
8:11 AM
TradeSter said...
ZIJIN-C1 and HKEX-C4 premimu is very high which is more than 50%. I wonder why people is so foolish to chase over it? Why are the market makers not doing their job correctly to set the warrant price relative to the mother share. Overvalued warrant price will definitely hurt those who chase them.

Comments - Both are very expensive, the premiums are too high for both HKEx-C4 and Zijin-C1. When its 50%, it takes a lot to work down the premium and the leverage is good but not that fantastic. Very rarely do you find CWs or even China shares go on a straight line up. Premiums tend to be very high for the first few days of trading as there are not many sellers only buyers. The situation will turn around very soon. Just look at how other China-H shares covereds have been trading, open initially on high premium, loses the premium very quickly as well after just a couple of week. Especially when you are looking at Zijin, which will have to queue behind Petrochina and CNOOC for an A- share listing, no hurry to latch on. Wait for premium to go to 20% first. It will get there.

6 comments:

sopskysalat said...

Hi Dali,

You are astute in identifying the catalyst in H-Shares, thus recommending the purchase of warrant in KLSE.

What about those of asia bank such as DBS, MAybank, UOB, etc? Will they be handicapped by any CDO exposure? As reported, DBS does hold some US$2 over bil of CDO. But that is only a small fraction of the market cap.

sopskysalat said...

Just want to say, will there be enough catalyst to run up the regional big banks? Tks

Salvatore_Dali said...

sops,

not now for banks, now is not an environment which is good for banks as the subprime and CDO blowout may have aftershocks and banks are still feeling if there are further shocks in their exposure down the road.... not now.

Puntamentalist said...

Today the premium of Zijin and HKex warrants by OSK touched 70%. This despite a drop in Zijin share price in HK today. Syndicates are in to "goreng" these buggers. Subsequent drop will be very painful. But for the short term, what the heck? If you bought Zijin warrants in HK yesterday, you lose money today but if you bought Zijin-C1, you make money!!! Just beware of the T+4 thingy!

sopskysalat said...

dali,

Yes, there is likely to report write off but since the banks are off the high, there is quite a priced into the current level. May be wait for the result and re-evaluate from there. Thanks anyway.

tcg82 said...

Hi Dali,
i subscribed, rcvd 2lot & sold them on 1st day. Siao lah our mkt.

my osk broker gave me a spreadsheet to calc fair value of hkexc4 & zijin based on exchange rate, ex.price, m um share price. even at today, both showing a premium in excess of 300% !??? is that right?