ROBERT Fleming has finalised a warrant-splitting exercise to boost trading in three of its issues hit by the downturn in the Hong Kong market.
The splits will create 10 times the previous number of covered warrants. The three issues will open for trading under their original codes tomorrow, but it may be some time before the success of the exercise can be gauged.
The merchant bank announced last month that it would split warrant issues on Hopewell, CITIC Pacific and Hongkong Telecom as part of a move to benefit warrant holders by increasing liquidity.
Covered warrants have been issued on a string of blue-chip companies since the instruments arrived in the Hong Kong market just over three years ago.
As a result of the split, investors will receive 10 new warrants for every one held but there will be no change in the exercise price. Before the split, one warrant was exercisable into one share of the underlying company. Now, 10 warrants will be exercisable into one share.
John Knox, global derivatives director of Jardine Fleming Securities, said there was no real difference in the value of the warrants and that the exercise was designed to meet shareholder preference for a larger number of lower-priced instruments.
