BOC intent to launch 33 warrants lifts shares
The Bank of China plans to release 33 derivative warrants on Monday, a record number for a single company on the first day of its warrants trading launch.
The BOC launch easily beats the current record holder, China Construction Bank, which issued 24 warrants on the first day in November last year.
BOC's warrants have been keenly anticipated since the stock began trading last month partly because buyers are hoping the related hedging activity will help push the stock's price higher.
Brokers said a buying spree of BOC shares had begun thanks to the warrants sale and its A-share listing in Shanghai tomorrow.
The country's second-largest lender has priced its A shares at 3.08 yuan each in the largest new share offering on the mainland, representing 2.85 times book value as of last December 31 and 22 times earnings per share last year.
BOC's H shares jumped 2.84 per cent to $3.625 yesterday, the highest since its listing on June 1, changing hands at 26.68 times earnings.
Brokers expect BOC to post a strong debut on its A-share listing that would boost its H shares.
Yesterday was the first day banks were allowed to issue warrants on CCB. According to the stock exchange, 14 issuers took the opportunity to launch 31 call warrants and two put warrants.
Call warrants allow investors to bet on the share price going higher while put warrants take a bearish view of the stock. Because of the required lag time, the warrants will be listed and start trading on Monday.
KBC Financial Products, a normally active issuer, launched three BOC call warrants yesterday.
'H-share warrants have been the market focus this year. We expect that there will be strong demand for warrants based on mainland financial stocks,' director Venus Wong said.
Wilson Lee, co-head of Asia ex-Japan structured products and equity derivatives at SG Securities, said the issuer launched three BOC call warrants as well. 'We believe China concept stocks will continue to drive the market,' he said.