Thursday, September 13, 2007

CWs for HK stocks as at September 12, 2007

The updated CWs valuation table for Hong Kong stocks is appended below. CWs, which traded at premium of less than 4%, are highlighted in green.



With the Hang Seng Index ('HSI') making a new high yesterday, I expect the above CWs to rise further. Nevertheless, it is noted that the sharp rise of HSI has been propelled by gains in share prices of Chinese-owned companies listed on the Hong Kong Exchange. The rise of these stocks is akin to a bubble and one must exercise caution in buying into derivatives (such as the above CWs), which is a highly leverage trade. In a bullish market, the gain can be very handsome. On the other hand, the losses can be very substantial in the event of any correction.

No comments: