CWs of HKEX-listed companies

Recently, I made a comment that if the SSECI were to have a decent counter-trend rally (prior to the Summer Olympic Games), the Hong Kong stock market might be given a boost. This might spell over to some of the CWs of HKEX-listed companies traded on our exchange.

I have taken a look at the CWs traded on our exchange, with the view of preparing a valuation table similar to those that I used to post on this blog. I did not go very far down that road because the list is now so long. Instead I go to OSK188.com & use its latest Structure Warrant Pricing Table (go here) and a similar table is appended below as Table 2. Then, zooming into CWs of HKEX-listed companies only, I did the following:

1. Look through the charts of the underlying shares in order to identify those that have broken above their downtrend line (In Table 1, I have highlighted those with positive breakout in blue, while those that have yet to do a positive breakout are in yellow);
2. From this list of positive candidates, weed out those that will expire before July 1st;
3. Then, pick up those that have premium of less than 15%.

Table 1: HKEX-listed companies' technical outlook (as per the above guide), as at April 10, 2008



Table 2: OSK's Structure Warrant Pricing Table as at April 10, 2008 (source: OSK188.com)

From the above, I have drawn up a list of CWs that are not too expensive (it's a relative thing!), won't expire within the next 80 days and whose underlying shares are relatively safer (since they have broken above their downtrend line). They are:

1. BOC-C2 (expiring Aug 22nd, with premium of 11.0%)
2. CHMOBIL-CA (expiring Aug 29th, with premium of 9.3%)
3. CHOLAND-C1 (expiring Jul 4th, with premium of 14.8%)
   
4. HSBC-C4 (expiring Jul 18th, with premium of 11.2%)
5. ICBC-C6 (expiring Jul 11th, with premium of 14.9%)

While these CWs are the better-valued CWs, there is no guarantee that they will go up. Buying CWs is a highly leveraged play & the current market may not be conducive to such play.

Note: A new CW for MTR (i.e. MTR-C2) has been issued but it is not on OSK188 table. CHMOLY, which stands for China Molybdenum, does not appear to be listed on the HKEX.