The five warrants are the first to give Singapore investors an opportunity to bet on the Kuala Lumpur Composite Index. Two are call warrants, giving investors the right to buy the index, and the other three are puts. The index closed yesterday at 1,453 points and the warrants are priced at 50-point intervals between 1,400 and 1,600 points, with issue prices ranging from 30 cents to 20 cents.
Singapore punters used to be able to trade about 200 Malaysian stocks through the central limit order book scheme, but the Malaysians shut that system down and imposed capital controls after the Asian financial crisis in the late-1990s. Since then it has been trickier to invest in (or hedge) Malaysian equities, though there are single-stock warrants on some of the bigger names.
The size of Singapore's warrant market doubled in 2007 to S$28 billion and could double again in 2008, according to Ooi Lid Seng, a vice-president in SG's structured products team in Singapore. "People are getting more comfortable with warrants in Singapore," he says. "We saw a 12-fold rise in accounts between June 2006 and June 2007."
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