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To eliminate foreign exchange risk, try Quanto warrants issued by overseas markets.
THE Malaysian structured warrant market picked up recently with the introduction of many warrants based on securities listed in foreign markets. In particular, warrants on Hong Kong listed H- shares (China companies listed on the Hong Kong Stock Exchange) have become very popular due to the huge Hong Kong warrant market, making it easier for issuers to hedge.
Investing in a warrant whose underlying asset is outside Malaysia gives rise to foreign exchange risk. A particular investor may have speculated correctly on the directional movement of the underlying security but may not make money if the Malaysian ringgit strengthens considerably against, say, the Hong Kong dollar during the lifespan of the warrant. Consider the following example: C Bank issued a call warrant - H-C1 - on H Company listed on the Hong Kong Stock Exchange with a...