"Wo Lun", "bull-bear certificate", "TRACKER FUND OF HONG KONG". You may have heard of these terms more or less, but most people still have little understanding of their meaning. this is actually the second article in a series of a wide variety of trading products in the Hong Kong stock market. let's take a good look at the dazzling major products in the Hong Kong stock market.
The main body of the market: stocks
As a securities market, the main trading product is, of course, stocks. All stocks in the Hong Kong stock market are listed on the Hong Kong Stock Exchange. By the end of 2016, there were 1973 companies listed on the Hong Kong Stock Exchange with a total market capitalization of HK $24.7613 trillion, surpassing the Euronext Stock Exchange (Euronext) as the sixth major market in the world, second only to the New York Stock Exchange, NASDAQ, London Stock Exchange, East Stock Exchange and Shanghai Stock Exchange.
The top 10 securities markets in the world in 2015
In Hong Kong, the stocks of all listed companies are mainly divided into two major sectors: the main board and the gem, which generally provide a fund-raising market for companies with a larger scale, a long history of establishment and a certain profit record. Gem is more likely to face smaller growth companies that cannot meet the threshold for listing on the main board.
The shares issued by the company can be broadly divided into two categories: common shares and preferred shares. The holders of common shares are shareholders of the company and have the right to vote. Most of the shares listed on the Stock Exchange are common shares and account for a major part of the turnover. Holders of preferred shares do not have the right to vote, but have priority over ordinary shareholders in receiving dividends agreed upon.
As shown in the figure below, by the end of 2016, there were 1724 shares listed on the main board of the Hong Kong stock market, including 1714 common shares and 10 preferred shares, with the number of shares increasing year by year.
In addition, the total market capitalization of motherboard shares is relatively concentrated in a small number of large companies. By the end of 2016, the total market capitalization of the 50 largest motherboard companies exceeded HK $15 trillion, accounting for 58.38% of the total market capitalization of motherboard shares. Tencent (00700) tops the list with a market capitalization of nearly 1.8 trillion, as shown in the following table:
* this data is not included in the total.
However, compared with a decade ago, the problem of high concentration of market capitalization has been greatly improved. In 2007, the top 50 companies accounted for 71.21% of the total market value of the motherboard shares. At that time, the market capitalization of China Mobile Limited (00941) reached 2.76 trillion Hong Kong dollars. Tencent, who has just been listed for three years, has a market capitalization of only HK $100 billion.
As for the gem, there were 260 listed shares by the end of 2016, with a total market capitalization of HK $310.9 billion. Compared with the main board, the market capitalization of gem shares is more concentrated in a small number of large companies, and the top 50 companies account for 72.5% of the total market capitalization of gem shares. At the top of the list is the "Cuiru BB shares" Lianwang Group (08217), which grabbed attention last year.
"Wo Lun" and Cow-Bear Certificate
Going back to the "nest wheel" and CBBC mentioned at the beginning of the article, for those who are new to the Hong Kong stock market, although they can often hear these two terms in the mouths of various Hong Kong stock "tycoons", they still have little understanding of their principles and connotations. in fact, these two trading products are an important part of the Hong Kong stock market.
"Wo Lun", in fact, is a common term used by investors for derivative warrants in the Hong Kong stock market, derived from its English name "warrant", but this translated name well reflects its characteristics-people who play well will get more and more income and get rich overnight, but they will be involved in this whirlpool with capital and interest if they are not careful.
Literally speaking, a warrant is a kind of "proof of rights". When you hold it, you have the "right" to buy or sell a stock at a specified price on a specified date. In the Hong Kong stock market, there are two kinds of warrants. Equity warrants are issued by listed companies, while Wo Wheel is usually issued by investment banks, holding them and making profits through exercise. This money is not given to you by listed companies, but compensated to you by investment banks. In other words, buying and selling warrants are actually betting against investment banks.
By definition, nest wheel is very similar to options, but it is a structured product traded in the spot market of the HKEx, while options are derivatives traded in the derivatives market of the HKEx. The following differences can also give investors a more comprehensive understanding of the wheel.
Having said so much, how on earth does Wo Lun make people get rich overnight, and how does it make people lose everything? Take chestnut, Tencent's current share price is HK $236.6. If Lao Wang next door thinks that Tencent will rise to HK $250 in October this year, then it can subscribe for the nest wheel "Tencent Credit Suisse 70 Buy D" (12916) at a very low price. if Tencent's share price exceeds the exercise price of HK $248.2 after maturity, then Credit Suisse will pay profit to Lao Wang with 19.02 times effective leverage, but if it does not exceed this price. Lao Wang will buy the money of this nest wheel.Don't get a penny back.。
For the nest wheel, there are several elements to pay attention to:
一、Exercise priceThe exercise price means that investors have the right to buy or sell a specified number of underlying securities at a specified time. If you buy 12916 of this round, it means that you have a virtual right to buy Tencent shares at a price of 248.2 Hong Kong dollars. For the subscription wheel, other conditions are the same, the lower the exercise price, the greater the value of the wheel, while the opposite is true.
二、Stock exchange ratioWhich represents the number of nests that can be used to rotate a underlying security Taking the stock conversion ratio of 12916 as an example, every 100 shares of this type of ferry can be exchanged for one share of the underlying share, and 10000 shares of the ferry can be sold, that is, buying and selling 12916 ferry shares is equivalent to the right of Tencent.
三、Effective leverThat is, the theoretical rise or fall of the underlying security, tracking the multiple of its round of rise and fall. For example, if Tencent rose 1% on that day, the effective leverage of 12916 is 19.02 times, then the price of 12916 should theoretically rise 19.02% on that day.
四、Proportion of street goodsThe index measures the proportion of retail investors held in the total circulation, and the higher the proportion of street goods, the higher the degree of market participation. This ratio is very important, many small volume of the round price difference is very large, and often no one to answer the offer.
五、Hit and draw.Assuming that Lao Wang buys this nest wheel 12916 at a price of 0.13, then on the exercise date, the theoretical cost that this nest ship can convert into the actual stock should be the cost of the nest wheel plus the exercise price, that is, HK $0.13, 100, 248.2, 261.2 Hong Kong dollars. This price is a tie point, and only when the stock price exceeds this price can the real profit be realized.
Generally speaking, Wanlun is a risky trading product. As mentioned earlier, Wanlun is actually betting against investment banks, which have a crushing advantage in pricing turbines, and most importantly, although the purchase of Wanlun is likely to bring dozens or even thousands of times of return, it is more likely to lose all principal. In other words, Wo Lun is actually a gambling tool in the Hong Kong stock market.
Relatively speaking, the CBBC is much milder than the Wheel, and similar to the Wheel, the CBBC also gives you the right to buy or sell the relevant products at the exercise price on the expiration date. As the name implies, the "CBBC" is suitable for investors who are bullish on related assets, while "Bear Certificate" is suitable for investors who are bearish on related assets.
The biggest difference between CBBCs and cowwheels lies in the factors that affect the price. Compared with CBBCs, the structure of CBBCs is relatively simple and clear, and the transparency in calculating prices is also relatively high. Most investors have the following "painful experience": they buy a certain stock because they are bullish, and then the stock goes up, but the price of the stock goes down instead of rising. This situation is not uncommon, the reason is that the round price is affected not only by the trend of positive shares, but also by factors such as extended volatility. Generally speaking, the decline in extended volatility will drag down the price of warrants, and its trend is less transparent and more difficult to predict.
Due to the introduction of the "compulsory recovery" mechanism, the price trend of CBBC closely follows the trend of relevant assets. Once the price of related products is close to the recovery price, the premium and extended volatility of CBBC will be significantly lower than that of nest wheel, reducing the factors of uncertainty.
Finally, let's talk about their nomenclature. for those who have not come into contact with nest wheels and CBBCs, these names are like books of heaven, such as "Tencent Credit Suisse 70 purchase D" mentioned above, and "constant Index UBS Seven B cattle Q". In fact, there is not much mystery here, so it is easy to understand it. Take the former as an example:
First of all, the first two words are the names of the relevant assets, including the listed company or index, the third and fourth words are the investment bank that issued the turbine / CBBC, and the last two words are the date of exercise of the turbine. An and B represent November and December respectively. The last Chinese character represents whether the turbine is to subscribe or sell, or whether it is a bull certificate or a bear certificate, and the last letter indicates The investment bank is likely to issue turbines for the same stock at the same time, but with different conditions (such as the exercise price), which is distinguished by ABCD.
In other words, the nest wheel of "Tencent Credit Suisse 70 Buy D" represents the subscription round issued by Credit Suisse for this individual stock Tencent, the exercise time is October 2017, and the "Hengzhi UBS QB Niu Q" represents the Hang Seng Index cattle Certificate issued by UBS in December 2017.
The weather vane of Hong Kong stock market: TRACKER FUND OF HONG KONG
As the first ETF fund in the Hong Kong stock market, TRACKER FUND OF HONG KONG (02800) was born with an extraordinary historical mission-to stabilize Hong Kong's financial market order and attack the impact of international hot money on Hong Kong stock market during the Asian financial turmoil in 1998. Until today, it is still a weather vane of the Hong Kong stock market, and it is also an important investment product for investors to allocate their portfolios and manage market risks.
TRACKER FUND OF HONG KONG is an investment trust listed in Hong Kong Exchanges and Clearing and traded on the Hong Kong Stock Exchange with the goal of providing returns that closely match the performance of the Hang Seng Index. Investors can buy a portfolio of securities representing the Hang Seng Index by buying TRACKER FUND OF HONG KONG. The performance of the fund is quite transparent, and the expected dividend payment twice a year is also popular with institutional investors.
In addition, the amount of investment of TRACKER FUND OF HONG KONG is relatively low, the minimum investment amount of its IPO is far lower than the funds required to buy the lowest trading units of each constituent stock of the Hang Seng Index, and investors subscribe during the initial public offering period, there is no need to pay any subscription fee, only a 1% brokerage commission and 0.011% SEHK transaction levy.
However, TRACKER FUND OF HONG KONG's offering process was not plain sailing. At the beginning of the issue, many investors worried that the shares previously bought by Hong Kong ZF would now be sold, which would have an impact on the market, and the subscription was not active, resulting in falling below net worth many times, or even no one was interested.
However, as the market stabilized later, and ZF also offered discounts and bonus shares to increase the attractiveness of investing in TRACKER FUND OF HONG KONG, many institutional and individual investors participated in the subscription until October 15, 2002. TRACKER FUND OF HONG KONG finally completed the subscription of the last batch of fund units to be sold.
In addition to the most famous TRACKER FUND OF HONG KONG, other exchange-traded funds (ETF) and real estate investment trusts (REITs) listed on the Hong Kong Stock Exchange are also investment products that attract investors' attention. By the end of 2016, there were 133 ETF funds and 11 real estate trusts on the Hong Kong stock market.
Like TRACKER FUND OF HONG KONG, other ETF funds are investment products that focus on a particular index and are designed to closely follow the performance of the index, covering major stock indexes, commodities and other indices in major markets around the world. While diversifying to reduce investor risk, it also gives investors an indirect channel to invest in overseas markets.
Real estate investment trusts are similar to ETF funds, but invest in income-generating real estate projects, such as shopping malls, offices and hotels, providing regular income for investors. Link Real Estate Investment Trust (00823) is the first real estate investment trust listed on the Hong Kong Stock Exchange and currently the largest real estate investment trust in Hong Kong, with a market capitalization of HK $112 billion by the end of 2016.