Why are covered warrants in great demand?

15-Jun-2019 Intellasia | Dau tu Chung khoan | 6:00 AM Print This Post

In recent days, the Vietnam stock market has been given a new wind by a new product: covered warrant (CW). Investors expect that CWs would bring more investment opportunities to the stock market of Vietnam.

In great demand

Very soon after being licensed by the State Securities Commission (SSC) to sell CWs, securities companies have been racing to launch this new product to the market to meet the new needs of investors.

With the heat of the new product, the Vietnam stock market has become more exciting in recent days. The first two companies to offer Initial Public Offering (IPO) of CWs including BIDV Securities Company (BSC) and MB Securities Company (MBS) from June 10th to June 12th 2019 both achieved huge successes in this issuance.

Specifically, according to data of Dau tu Chung khoan, by the end of the trading session on June 12th, BSC’s distribution of CWs reached 110 percent. This is a positive result for the first IPO of the product. The question is that with high financial leverage, is this a new wave for Vietnamese investors?

Why are CWs attractive?

Explaining why CWs have been selling well, securities companies said that with enhanced professional knowledge, investors express their desire for professional investment when actively participating in new games without waiting for market reactions.

BSC’s statistics have proved that, as 100 percent of customers buying MWG (stock code of Mobile World Group on HCM City Stock Exchange (HoSE) warrants from the company’s headquarter and branches were all individuals. Thus, the market is getting hotter and hotter, and the game between individual investors will be more interesting. This is no longer the game of the giants.

In addition, the initial success of the IPOs of CWs also recorded the collaboration of market management, organisation and operation agencies, such as the SSC and HoSE in designing products in line with market taste, as well as training investors.

With in-depth research on market and products, securities companies have provided investors IPOs of CWs with transparent information, thereby bringing new effectiveness and safe investment opportunities.

CWs also attract buyers because to perform the transaction of this product, investors only need to spend a much smaller initial amount of money than buying basic securities, as the prices of CWs are often much lower than the base prices. However, investors have the opportunity to receive a large potential profit when the prices increase, especially in the cases when the base prices are higher than the executed prices. And the loss (if any) is within the anticipated range.

In the context when the Vietnam stock market is changing and developing rapidly, investors will face many difficulties and challenges in accessing information or getting familiar with new factors. Thus, the task of agencies managing, organising and operating the market as well as securities companies is to join hands to build quality products, making it easy for investors to choose the most appropriate and safe investment method.


Category: Stocks, Vietnam

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