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Company warrants - new features worth noting

WHEN company warrants first made their appearance in the Singapore stock market, almost all followed a standard template - they were invariably part of a rights issue, they could be detached and traded separately from the stocks or bonds that formed the rights and they had a five-year life span.

Warrants proved very popular because of the leverage they offered, so when the underlying shares rose by a certain percentage, the associated warrants rose by a multiple of that percentage. Of course, the reverse also held true and underlying stock falls were also magnified by the leverage but by and large, because of relatively lower cash outlay and long life spans, company warrants in their heyday did...

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