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.