Experts answer questions on covered warrants at a seminar organised by SSI in HCM City on June 6. (Photo: VNA) HCM City (VNS/VNA) - Covered warrants, whichwill be traded on the Ho Chi Minh Stock Exchange (HOSE) from this month, areexpected to attract a large number of investors since they have lowerinvestment costs and can be leveraged more than conventional financialproducts, heard a recent seminar in HCM City.
Covered warrants are similar toderivatives. Investors have the right to resell the warrants on themarket or hold them until maturity date, and they are alwaysassociated with underlying stocks.
Speaking at the seminar on Covered Warrants – AnticipatingNew Opportunity, Nguyen Duc Thong, securities derivative transaction directorat the SSI Securities Corporation, said covered warrants are a popular stock onmany developed markets.
Markets that have developed covered warrants suchas Taiwan, Thailand, Hong Kong, and the Republic of Korea and Vietnam'ssecurities market have many similarities, includinghaving high rate of individual investors, short-term trading accountingfor a majority and large demand for using leverage.
Bringing such premium-structured products to Vietnamwas a correct and necessary step, he said.
Covered warrants would help diversify asset classesand help hedge risks in the context of market volatility, he said.
To issue them, securities companies must meet certainfinancial norms and obtain a permit from the State Securities Commission of Vietnam,delegates said, adding that fewer than 12 securities companies are qualified toissue them.
SSI, the largest brokerage in thecountry, would issue six CW codes based on four underlying shares of FPTCorporation (FPT), Mobile World Investment Corporation (MWG), MilitaryCommercial Joint Stock Bank (MBB), and Hoa Phat Group Joint Stock Company(HPG), Thong said.
The company had instructed its brokers to provide investorswith proper consultation before they trade the new product, he added.-VNS/VNA
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