Submitted by: Submitted by shw0357
Views: 211
Words: 529
Pages: 3
Category: Business and Industry
Date Submitted: 12/01/2012 01:55 AM
n the following I would like to introduce how warrant’s issuer using some tricky method to deal with small investors, and how those tricky methods harm investor. In generally, there are five methods to cheat small investor, when those five methods combine together; investors have no chance to avoid and suffer loss.
1. Offer the price slowly
In fact, each Warrant Listing Documents are set out in the Liquidity Provider shall continue to offer (in five minutes after the market opened) or respond to quote requests. However, it is not the case. Hong Kong Institute of Investors Chairman Ricky Tam said that:”Warrants issuer will not provide the price of the warrants, when they see the market trend is not in their favor”. When the trend is turn into their favor, the price will appear.
2. Big difference in bid-ask spread
The buying price of Citibank of HSI warrants(2121)is $0.36, while the selling price is $0.41. When the investor buys the warrant with $4.1, even if the stock market without any changes, investors no reason and must be hard eclipse 13%, if they sell back to issuer. You may ask why investor do not sells the warrant to other investor. The next method will tell you the answer.
3. Artificial warrant trading volume
The warrant issuer will hire some financial actor say something good for the target warrant. At the result, more investor pays close attention to it and then the issuer will deliberately arranged cross trading, that is their own with their own trading. This action causes a big trading volume illusion that attaches more investor buying the warrant. Unfortunately, this illusion will disappear after several day, and the transaction will keep in very low volume even zero. ( The typical example is(9553)is example of the Bank of China ,the warrant listed on July 13, issuer say in newspaper publicity, " ‘to remind’ the investors in the round of enthusiastic buying, you can pay more attention.” Advertising a turnover really active up to 2.7 million...