OREANDA-NEWS. Structured warrants present an alternative means for investors to leverage their views on the price performance of Indices in addition to stock prices. Singapore’s three listed banks, DBS Group Holdings (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB) together represent 34% of the Straits Times Index (STI) weighting and represented 18% of the day-to-day stock market turnover in 2015.

The recent moves have seen the three banks’ current average price-to-earnings ratio move to a multiple of 8.5 and price-to-book ratio move to a multiple of 1.0 respectively. The average price-to-earnings ratio is lower than the STI at 12.0. At a multiple of 1.0, the price-to-book ratio infers the prices of the three stocks are trading at their book value as of the 2015 Sep Qtr.

Source: SGX, Bloomberg & SGX StockFacts (data as of 26 January 2016)

SGX list a total of 34 structured warrants that provide exposure to DBS, OCBC and UOB. The  10 most active structured warrants based on the three banks include eight Call warrants and three Put warrants and are tabled below. 

Counter Name Stock Code Expiry Date Call/Put Trade Value Net
DBS MB ECW160705 BNMW 5-Jul-16 C    7,759,158
DBS MB ECW160711 BPJW 11-Jul-16 C    6,296,225
UOB MB ECW160705 BNKW 5-Jul-16 C    5,589,565
OCBC BK MB ECW161004 BNPW 4-Oct-16 C    3,752,246
UOB MB ECW160704 BMMW 4-Jul-16 C    3,553,674
DBS MB EPW160215 BGWW 15-Feb-16 P    1,179,490
DBS MB ECW160704 BMDW 4-Jul-16 C    1,047,179
UOB MB EPW160601 BKIW 1-Jun-16 P       948,678
OCBC BK MB ECW161003 BMKW 3-Oct-16 C       728,721
DBS MB ECW161003 BNNW 3-Oct-16 C       586,810

In terms of relative 2016 expiry dates, the two Put warrants have a February and  June expiry, whilst the eight Call warrants have a longer term duration with expiries between July and October. Investors can refer to the SGX website for a list of available structured warrants on SGX. 

Specified Investment Products

Structured warrants are an example of Specified Investment Products (SIPs). The MAS has introduced measures for intermediaries to safeguard the interests of individual investors investing in SIPs, which are products with features that might be more complex in nature.