The Taiwan Stock Exchange Corp (TWSE, 台灣證交所) said yesterday brokerage houses and investment banks would soon be able to start issuing “callable bull/bear contracts” (CBBCs), which it hoped would boost derivative volume on the local market.
The TWSE said it expected to complete preparations for the market’s launch by July 15.
The announcement came days after the Financial Supervisory Commission approved on Tuesday the issuing of the derivatives in the country, based on Hong Kong’s experience with CBBCs.
According to the World Federation of Exchanges, Hong Kong had turnover of US$533.9 billion in securitized derivatives (including warrants and CBBCs) last year, by far the most of any market in the world and far ahead of Taiwan’s US$6.6 billion.
Similar to stock warrants but issued by third parties such as investment banks and brokerage houses, CBBCs follow the performance of an underlying asset or stock, and, as a Wall Street Journal blog put it, appeal to the gambling instincts of retail investors.
They are leveraged instruments, meaning investors need only pay a fraction of the cost of the underlying asset or stock to get a contract, and as such are sometimes described as being similar to buying or shorting shares on margin.
Investors who buy callable bull contacts tend to hold a bullish view on the underlying asset or stock and attempt to capture an anticipated rise in its price, while buyers of callable bear contracts bet that the asset’s value will fall.
To limit risks, the investor sets “call prices” — the point where they can cash out or stop the bleeding before the contract reaches maturity — and if the call price is hit, the contract immediately expires.
The TWSE said that while any investment instruments bear certain risks, CBBCs could become good short-term money-making products for investors.
The product would be introduced at a time when local interest in warrants appears to be growing. As of the end of last month, about 35,800 investors had traded warrants on the local bourse, up 54 percent from the same period a year earlier, according to the TWSE.
In the first half of this month, the number of warrant investors rose 16,200 to a total of about 52,000.
So far this year, the number of applications for warrant issuance had reached 4,185, which represented 43 percent of the total applications for all of last year, the TWSE said, adding that the value of warrant issuance so far this year was NT$69 billion (US$2.37 billion), up more than 50 percent from a year earlier.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
Popular vape brands such as Geek Bar might get more expensive in the US — if you can find them at all. Shipments of vapes from China to the US ground to a near halt last month from a year ago, official data showed, hit by US President Donald Trump’s tariffs and a crackdown on unauthorized e-cigarettes in the world’s biggest market for smoking alternatives. That includes Geek Bar, a brand of flavored vapes that is not authorized to sell in the US, but which had been widely available due to porous import controls. One retailer, who asked not to be named, because
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai
RSS