Thursday, November 05, 2015

FTSE China A50: CWs are the Tickets for the Recovery Play

Chinese equity is staging a recovery. From the chart below, we can see that China A50 broke above its medium-term downtrend line in October. Then it went into a sideways move for the following 4 weeks. Finally, it has begun to rise sharply today. This is the beginning of the next upleg, which may be a cautious one given the last 4 months of bloodbath.

Chart: FTSE China A50's daily chart as at 5 Nov 2015_11.00am (
As mentioned before, the way to play this recovery is to buy CWs. My preferred CWs for this play are China50-CB & China50-CE. See the valuation table below.

Table: China50's valuation as at Nov 5, 2015_11.00am

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, any of the derivatives linked to FTSE China A50.


lai said...

Hi Alex,

Between mrcb, wct and gadang, which one you would put your bet on.


Ivan said...

Good selection due to low premium.

Pls check the volume and holding % in these cw before trading.

Happy sharing.

steve said...

biggest problem is lacking of liquidity, and lacking of traders who know how to play (do the calculation on fair value) these warrants. If bursa's data feed provides a premium number so that all platforms could displayed that "most essential number" to traders, it could help on liquidity. I remember few years back, local traders even treated the H warrant same as Call warrants following mother share's exact direction. Haha!

Alex Lu said...

Hi lai

Despite recent recovery, both mrcb and wct are still off their high. gadang is near its recent high. based on this, I think I would like to look at mrcb or wct. And, between these 2 stocks, I prefer mrcb because I believe it could turn out to be a in the making. By that, I meant the group is being managed by an entrepreneur who has money at stake in the success of the enterprise.