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| Macquarie's STI Warrants Debut Today! | |||||||||||||||||||||||||
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Macquarie is pleased to list the following new STI warrants this morning:
Stock picking not needed STI warrants give investors the opportunity to leverage their views on the broader Singapore stock market without the need to stock pick. The Straits Times Index (STI) comprises of the top 30 SGX Mainboard listed companies and is widely followed by traders and investors alike. Bullish investors could leverage their views using STI call warrants, while bearish investors could leverage using STI put warrants. Protecting Singapore portfolios The value of put warrants increases when the underlying share/index falls in price. This feature allows put warrants to be used as a form of insurance to protect an existing share portfolio against a falling market. An investor with a holding of Singapore stocks who was nervous about the future direction the market could consider purchasing STI put warrants instead of selling shares. This would allow the investor to retain share ownership without having full exposure to the downside risks. Investors should, however, understand the complexity of utilising Warrants for hedging or portfolio protection purposes. For example, the value of the warrants may not exactly correlate with the value of the underlying shares. |
Deutsche Bank Index Warrants
SGX Counter Full Name Stock Strike Multiplier
code
HSI_21200_DB_ECW100930 L1LW 21200 1/300
HSI_20600_DB_EPW100930 L1KW 20600 1/300
HSI_20800_DB_ECW100930 L0VW 20800 1/400
HSI_20200_DB_EPW100930 L0WW 20200 1/400
DJI_DB_ECW101220 L1EW 11000 1/2500
DJI_DB_EPW101220 L1FW 10000 1/2500
STI_3000_DB_ECW110103 L1GW 3000 1/500
STI_2850_DB_EPW110103 L1HW 2850 1/500
NIKKEI225_DB_ECW110314 L1IW 10000 1/30
NIKKEI225_DB_EPW110314 L1JW 8500 1/30
The benefits of index warrants
Structured warrants provide a way for investors with either bullish or bearish views to participate in local and global markets. With warrants, investors may use a smaller initial investment to make use of the leverage effect to participate in market movement.
Apart from warrants that track local underlying, there is also a range of warrants that track overseas underlying, such as indices.
Index warrants can be easily traded during Singapore trading hours through a broker, with liquidity provided by the issuer. There is a range of warrants related to foreign indices listed on the Singapore Exchange (SGX).
Besides the Straits Times Index and the
Hong Kong Hang Seng Index,
Deutsche Bank has a range of index warrants related to
Japan’s Nikkei 225 and the
United States Dow Jones Industrial Average Index on SGX.
As with other warrants, index warrants have a gearing effect, which give investors greater exposure to potential price movements of an asset. Potential gains or losses are increased as a result of gearing due to the leverage effect.
Investors can thus use these instruments to participate in both bullish and bearish market movements.
However, there is a foreign exchange risk, as the warrants are priced in Singapore dollars and the underlying index is in a different currency. Hence, fluctuations in the exchange rate may affect the warrant price.
Investors should also note that when foreign indices are closed for a holiday on a Singapore trading day, the market maker will not provide liquidity, as there is no market in the foreign index.
Index warrants are also affected by the same external factors as all warrants, such as changes in implied volatility and time decay.
More educational material can be found on
www.dbwarrants.com.sg.Why do I not see an increase in the price of the call or put Warrants respectively when the price of an underlying increases or decreases?
Other than the price of the underlying, the price of a warrant will also be affected by other factors such as time to maturity, volatility, interest rate, dividend and the supply and demand of the warrant.