THOUSANDS of small speculators saw their cash nearly halved yesterday when the price of the Sponikle and Polycourt covered warrants from the stable of tycoon Li Ka-shing collapsed.
The Sponikle warrant in Cheung Kong which expires on April 26 crashed $1.85 or 47.1 per cent to $2.075, while the Polycourt warrant in Hutchison Whampoa which expires on May 16 collapsed to $1.20, down 95 cents or 44.2 per cent.
Both were popular among retail investors keen to bet on the success of Mr Li without putting up a large stake, and had been bid up by arbitrage activities. Investors thought yesterday's sharp price falls in the underlying shares made it unlikely they would expire in the money.
Before the start of trade, Cheung Kong announced that its annual results would be brought forward a week to this Thursday, fuelling speculation that the results may be better than expected, or that some other announcement would be made.
Other soon-to-expire warrants also collapsed as hopes of profit were decisively ended. Biggest loss of the day was for the warrants in K. Wah International, which expire on March 31. They crashed to a nominal five cents from 23.6 cents, a fall of 78.8 per cent.
The warrants have an excise price of $1.80, and K. Wah's shares fell 12 cents yesterday to $1.78, although anyone holding the warrants could find it difficult to sell at any price, and therefore have lost 100 per cent of their investment.
Other derivatives also saw violent price movements.
