Warrant issues, which were all the rage in the final quarter of last year and opening months of this year, have fallen out of favour. Issuers pin the blame for the slowdown on the market's downturn, coupled with some houses' growing desire to limit their exposure to the instruments in the territory. Rafael Blot, head of marketing and sales for equity derivatives at Societe Generale, said: 'You had a lot [of warrants] in January and February when the market was at the top. The day the market peaked there were something like eight or nine.' The Hang Seng Index has fallen 10.4 per cent since its closing high of 13,868.24 on January 20. The flurry of warrants peaked that month. Credit Lyonnais Securities (Asia) said 75 covered warrants were launched, raising $7.18 billion for the banks that issued them. The figure dropped to 27 in February and to 12 last month. This month, only three new warrants have hit the market. One equity derivatives trader said: ' People are shying away from them as they are normally seen as bull-market instruments to capitalise on sharp, upward movements.' Another market source said Hong Kong had been a target for issues because the market had been rising fast and had a strong legal framework in place. However, some houses were uneasy with the consequent concentration of risk. Mr Blot said many warrant buyers had been burnt by the slide in prices and were not eager to commit further money. Prospects for drawing fresh funds into warrant issues depended either on prices making a definite break for higher ground or a turn in sentiment among investors that they were about to do so, he said. The much-touted handover rally stands out as a probable trigger. A surge in market confidence, propelling equity prices upward could provide ideal conditions for a warrant renaissance - if it happens. 'We believe there will be a big rebound closer to the handover. That has to happen. If it doesn't, I'll be very surprised,' the trader said.