Derivative News

SG WARRANT IN FOCUS

  • Singapore bank shares staged an impressive recovery last week along with the general market. Uncertainty however remains as some investors fear that write-offs from the US sub-prime loans have not abated and will affect the global economy further. Singapore banks with their stronger balance sheets are in a much better position to withstand any slowdown.

  • The bank shares are still hovering near the lower end of their recent trading range despite the rebound last week. Investors who expect the recovery to continue may want to look at DBS call warrant E2PW and UOB call warrant EZ2W.

Warrant Name

Code

Type

Strike

Maturity

Effective Gearing

Implied Volatility

DBS SGA eCW080630

E2PW

Call

19.00

30/06/08

6.7 x

46.5%

UOB SGA eCW080707

EZ2W

Call

19.80

07/07/08

6.3 x

47%


 

 

  • The Hang Seng Index (“HSI”) has been on a downtrend since late February but it rebounded early last week as some investors took the opportunity to bargain hunt for over battered shares. Despite the turnaround, sentiments remain fragile. Investors who foresee the HSI to strengthen further may look at call E6MW whilst those who hold a negative view may consider put E6OW.

Warrant Name

Code

Type

Strike

Maturity

Effective Gearing

Implied Volatility

HSI24000 SGA eCW080429

E6MW

Call

24,000

29/04/08

9.9 x

50%

HSI22600 SGA ePW080429

E6OW

Put

22,600

29/04/08

8.1 x

54.5 %

Source: SG and Bloomberg (28/03/08)
This information shall not be construed as an offer, invitation, advertisement, inducement or representation. The Société Générale Group assumes no responsibility or liability for any consequences, financial or otherwise, arising from this information. If a recommendation is made with respect to any warrant, please note that (1) the recommendation is intended for general circulation; (2) the recommendation does not take into account the specific investment objectives, financial situation or particular needs of any particular person; and (3) advice should be sought from a financial adviser regarding the suitability of the warrant, taking into account the specific investment objectives, financial situation or particular needs of any person in receipt of the recommendation before the person makes a commitment to purchase the warrant. The prices of warrants may rise or fall and the warrants may expire worthless, resulting in a total loss of investment. For the full disclaimer and terms and conditions of the warrants, please refer to the Base Listing Document and the relevant Supplemental Listing Documents, which can be downloaded from the website www.warrants.com.