KIS to sell covered warrants for four large-cap stocks

Friday, Aug 16, 2019 08:22

Real estate-retail-tech giant Vingroup (VIC) and its retail arm Vincom Retail (VRE) will soon have covered warrants. — Photo

KIS Viet Nam Securities Co (KIS) will issue covered warrants that underline shares of four large-cap firms – steel maker Hoa Phat Group (HPG), consumer staple firm Masan Group Corporation (MSN), real estate-retail-tech giant Vingroup (VIC) and its retail arm Vincom Retail (VRE).

All four covered warrants will have a term of three months, with a conversion ratio of two to one for HPG and VRE and five to one for MSN and VIC.

The prices of the four covered warrants will be 30 per cent higher than the market price of the underlying stocks.

After the offering process, all of the covered warrants will be deposited at the Viet Nam Securities Depository Centre (VSD) by the issuing company. The non-distributed covered warrants will be held by KIS in its proprietary trading account and be freely traded. After that, covered warrant codes will be listed on the Ho Chi Minh Stock Exchange.

A covered warrant is a security that gives the holder the right to buy or sell an underlying asset at a specified price on or before a specified date.

Underlying assets can be a single stock, a basket of stocks, an index, a commodity or a currency. Covered warrants have been listed and traded on the Ho Chi Minh Stock Exchange since June 28.

The fourth securities product, after stocks, fund certificates, bonds and futures, is expected to provide investors with more options and draw foreign capital in listed companies as there is no foreign ownership limit on these products.

During the first one to two weeks of trading, covered warrants received a positive response from investors; however, its trading soon slowed down and liquidity dropped. Since the inception of covered warrants in Viet Nam, their total trading volume has reached more than 67.7 million, worth VND220.8 billion (US$9.4 million).

There are currently 16 covered warrant codes being traded on the stock market, underlying the stock codes of FPT Corporation (FPT), Hoa Phat Group (HPG), Military Bank (MBB), Mobile World Group (MWG), Phu Nhuan Jewellery (PNJ) and Vinamilk (VNM), with maturity of three to six months.

Most of the listed covered warrants have higher prices than when they were initially released.

For example, the covered warrants of Mobile World Group (MWG) are on an upswing. CMWG1901 issued by BIDV Securities Co (BSC) now fetches nearly four times its issuing price. CMWG1902 issued by VNDirect Securities Co (VNDS) is priced 234 per cent higher. The increases for CMWG1903 issued by HCM City Securities (HSC) and CMWG1904 issued by SSI Securities (SSI) are 128 per cent and 150 per cent, respectively.

KIS is one of eight securities companies qualified to issue covered warrants, along with SSI Securities Inc (SSI), HCM City Securities Corp (HSC) and Viet Capital Securities Corp (VCSC). — VNS

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