Update On China Covered Warrants

These are volatile buggers and need to be monitored always. In the first few weeks when they were introduced, they were priced expensively and traded even more so. Somehow after the global tussle with subprime, almost all China covered warrants are cheaply traded (each warrant has an intrinsic value, usually priced in terms of its implied volatility and time value). Some are so ridiculously cheap, you'd think they are selling them at Petaling Street!

Company / Warrant Px / Premium / Gearing / Maturity

Category: Ridiculously Cheap Covered Warrants & Excellent China/HK Exposure

CCCC-C1 / 0.425 / 0% / 6x / 31 Jan 2008

CCCC-C3 / 0.115 / 8% / 15x / 4 Apr 2008

p/s CCCC-C3 is a lot better and cheaper as a buy & hold than C1

HKEX-C3 / 0.575 / 0% / 12x / 4 Apr 2008

HSBC-C1 / 0.155 / 7% / 40x / 4 Jan 2008

HSI-C1 / 0.40 / 0% / 24x / 29 Feb 2008

HWL-C1 / 0.275 / 7% / 13x 2 Jan 2008

Sinopec-C1 / 0.105 / 12% / 16x / 31 Jan 2008

Category: Cheap Covered Warrants & Good China/ HK Exposure

CNOOC-C1 / 0.105 / 15% / 6.7x / 25 Feb 2008

China Mobile-C4 / 0.40 / 4% / 6x / 28 Mar 2008

ICBC-C1 / 0.195 / 3% / 6x / 29 Feb 2008

ICBC-C3 / 0.18 / 0% / 6.5x / 2 Jan 2008

Petrochina-C1 / 0.185 / 8% / 6x / 29 Feb 2008

Petrochina-C3 / 0.165 / 7% / 6x / 17 Jan 2008

p/s Petrochina will be trading soon in Shanghai Exchange (within 2-6 weeks) and the IPO is priced close to the H-shares, I anticipate a jump of at least 40%-50% in the first few days of trading. This will spur buying of the H-share of Petrochina as well as its NYSE listing shares. Owing to the unique deliniation of investor pool - the Shanghai will trade at a huge premium to the H-share in HK, and you will find the NYSE trading at a discount to the H-share. The first 3-tiered share price for one single stock. Hence, for a strong speculative buy, the Petrochina covered warrants are the way to go.

Shenhua-C1 / 0.125 / 7% / 6.8x / 25 Feb 2008