List of HK call warrants

Many of the HK-CWs closed at a discount last Friday as traders and investors disposed of their shares; partly because many do not want to hold any positions over the weekend and also force-selling activities. The Dow Jones industrial index closed slightly lower last Friday at 13,895.63 (-17.31 points). Traders can watch out for the CWs with huge discount, such as CHMOBIL-C1 (1.83% discount), CNOOC-C1 (2.08% discount), & ICBC-C3 (1.87% discount). Nevertheless, do stay cautious as many of the underlying stocks have already risen quite a lot.

New listing: CHLIFE-C4, PETROCH-C4

China Life (2628)
CHLIFE-C4 @ RM0.32 ; underlying share @ HKD 43.20 ; premium 2.02%
At a premium of 15%, CW price is RM0.57 (25 cents / 78.0% gain)
CHLIFE-C3 closed at 20 cents today (premium 15.70%), thus CHLIFE-C4 should be trading at around the same premium too.

Petro China (0857)
PETROCH-C4 @ RM0.145 ; underlying share @ HKD14.06 ; discount 6.62%
At a premium of 15%, CW price is RM0.416 (27 cents / 186.58% gain)
It's been a long time since we last saw call warrants hit more than 100% gain on the first day of trading. Even with a 5% premium, PETROCH-C4 can go to 29 cents, a 100.28% gain in price!
Are the glory days of the call warrants coming back?

New listing: ANGANG-C1, CHEUNGK-C1, CCCC-C4, CHLIFE-C3

The table above shows prices of the call warrants at different premiums (from 0% to 25%), based on the latest closing prices of the underlying shares.
By referring to past information, we can assume that investors are most likely willing to purchase newly listed CWs at 15% premium on a normal trading day. If the market is extra bullish, a 20% premium wouldn't be much of a problem. Using a premium of 15%, we can roughly guess the prices of the CWs for tomorrow.

Angang Steel (0347)
ANGANG-C1 @ RM0.10 ; premium 11.85%
At a premium of 15%, CW price is RM0.113 (13.18% gain)
Note: Angang Steel's H-share is still trading around 30% discount to its A-shares.

Cheung Kong (0001)
CHEUNGK-C1 @ RM0.11 ; premium 9.94%
At a premium of 15%, CW price = RM0.147 (33.93% gain)
Note: The recent rate cut in Hong Kong has benefited property stocks.

China Communications Construction (1800)
CCCC-C4 @ RM0.11 ; premium 19.14%
At a premium of 15%, CW price = RM0.088 (20.36% loss)
Note: CCCC's share price has not moved much for the past 2 weeks, causing its CW to have a higher premium. Nonetheless, I reckon CCCC-C4 will still be able to stay on the green side tomorrow.

China Life Insurance (2628)
CHLIFE-C3 @ RM0.11 ; premium 5.44%
At a premium of 15%, CW price = RM0.169 (53.69% gain)
Note: China Life's share price has just started to move, and is heading to 45HKD.

Fed reduced interest-rate; HSI closed at record high

Hong Kong shares ended sharply higher, with the main index finishing above 25,000 points for the first time. In a widely anticipated move, the Fed cut its benchmark rate by half a percentage point, its first reduction in four years, to 4.75 percent on Tuesday in a move to avert a possible economic slowdown in the US.
The benchmark Hang Seng Index closed up 977.79 points or 4%at 25, 554.64, after hitting a fresh intraday high of 25,648.44. Breadth was positive as gainers outpaced decliners 572 to 409 while 151 stocks were unchanged. Volume traded reached 18.17 billion share worth 131.81 billion HK dollars.

Market heavyweight CNOOC ended at a record high, up 1.32 dollars or 12.4% at HKD11.98. CNOOC, the listed arm of the mainland's largest offshore oil producer, China National Offshore Oil Corp, surged after oil prices breached 82 US dollars per barrel in after-market trading today. Brokerage house Goldman Sachs has a "buy" rating on CNOOC as it expects the company to benefit more than its peers from the higher oil prices. Its call warrant CNOOC-C1 surged a 6 cents (44.44%) to close at an intraday high of 19.5 cents.

China raised lending rate... again..

China raised its benchmark one-year lending rate by 27 basis points to 7. 29 percent, the highest level in nine years, in a continuing effort to cool the economy and curb inflation. It is the fifth time this year that the Chinese authorities have increased rates. The annual rate of inflation in the mainland accelerated to 6.5 percent in August, the highest since December 1996, as the economy expanded at an annual rate of 11.9 percent in the second quarter, the fastest pace in 12 years. Aside from raising rates, analysts also expect China to increase the amount of reserves that banks should deposit with the central bank to cut bank lending and ease consumer spending.

The 2 Giant Chinese energy companies: China ShenHua Energy & CNOOC

China Shenhua Energy was sharply higher after news that mainland regulators will review the company's A-share issue plan on Monday. The stock surged 2.05 hkd or 5.32 pct to 40.6, off an all-time-high of 41. 1.
The China Securities Regulatory Commission (CSRC) said it will review China Shenhua Energy's plan for an initial public offering on the Shanghai Stock Exchange. According to a draft prospectus, Shenhua Energy, China's largest coal producer, will issue up to 1.8 bln A-shares for listing.
Quoted from the Forbes' Fabulous 50: "China is burning coal faster than its largest miner can pull it out of the ground. So China Shenhua is looking for more, both at home and abroad. Plans to raise $7 billion with a new listing in Shanghai's roaring market (it listed in Hong Kong 2 years ago), even though it has plenty of cash. Will use the proceeds to expand its 21 domestic mines, to acquire more mines, add more power plants and beef up its railroad and harbor infrastructure. Chairman Chen Biting aims to make China Shenhua, now number 2, the world's largest coal miner. Is 80% owned by Shenhua Group, a government entity."
SHENHUA-C1 surged 4.5 cents (+25.71%) to close at 22 cents (premium 3.14%) with an intra-day high of 23 cents last Friday.

With the oil price touching a new high, the next counter to look out for is the China National Offshore Oil Corporation Ltd. (CNOOC) and its call warrant, CNOOC-C1.
Quoted from the Forbes' Fabulous 50: "China's buccaneering offshore oil company goes where few Western giants dare in search of resources. Signed an exploration contract in war-torn Somalia in May and is reportedly negotiating in Iran. The shares, listed in Hong Kong, have risen 22% in the last 12 months, but net income has been growing at 32% on average over the last 5 years. Came to embody Western fears of Asian state-owned companies buying up corporate America and Europe after its bid for Unocal was blocked by the US government in 2005. CNOOC is 66% owned by government entities, but independent board members are in place to speak for international shareholders."
CNOOC added 20 cents to closed at HKD 10.34 last Friday. Meanwhile its call warrant, CNOOC-C1 closed at 12.5 cents (+1 cent / +8.7%) last Friday, and currently having a premium of 6.62%.

H-shares trading at discount to A-shares; the CWs to look out for are...

At present, only call warrants of these four companies are being listed on bursa (CHALCO, CHINA LIFE, ICBC, and SINOPEC).
By allowing investors from mainland China to invest overseas, H-shares in Hong Kong which are trading at discount to their A-shares counterparts in Shanghai/ShenZhen would definitely be at the top of the list. Most likely, these H-shares prices will rise and A-shares prices will fall as investors would opt for H-shares which are much more cheaper.
The orange column shows the price of the H-share if it was to rise to at least half the level of the A-share price. And from there, we can project the expected price for its call warrant. Please refer to the table above.