VNDirect Securities Corporation (VNDS) will issue covered warrants that underline shares of Mobile World Investment Corporation (HoSE: MWG) and FPT Corporation (HoSE: FPT) on June 10. A covered warrant is a security that gives the holder the right to buy or sell an underlying asset at a specified price on or before a specified date.
Underlying assets can be a single stock, a basket of stocks, an index, a commodity or a currency. Covered warrants will be listed and traded on the Ho Chi Minh Stock Exchange from June 28.
The fourth securities product, after stock/fund certificate, bond and future, is expected to provide investors with more options and draw foreign capital in listed companies as there is no foreign ownership limit on these products.
VNDS is among 10 securities companies that are qualified to issue covered warrants, siding others such as SSI Securities Inc (SSI), HCM City Securities Corp (HSC) and Viet Capital Securities Corp (VCSC).
FPT Corporation in December 2017 cut its stakes in FPT Retail and FPT Trading to below 50 per cent. The company has since then re-allocated resources to focus on the fields of digital transformation and technology development.
As Industry 4.0 emerges, bringing opportunities to the Vietnamese economy, digital transformation is forecast to be a potential sector for FPT.
In the case of Mobile World Investment Corporation, the company has succeeded in expanding its electronic, digital and consumer retail chains, becoming the biggest retailer in Viet Nam.
FPT shares have gained more than 21.3 per cent since the beginning of the year and Mobile World's share price has spiked 7.6 per cent since mid-April thanks to increased purchased of electronic devices.
The two companies have also made stable dividend payouts in recent years. In addition, trading liquidity figures of the two companies’ shares are also high among all listed firms.
Last Friday, nearly 611,860 FPT shares and 626,570 Mobile World shares were traded through order-matching transactions.
Those factors assure the two firms’ shares are good underlying assets and investors may have no worries trading the covered warrants of the two stocks.
There is very low chance of price manipulation with covered warrants, Tran Anh Dung, director of VNDS’ Market Strategy Department, told reporters in an interview on Saturday.
The total amount of covered warrants to be issued was capped at 10 per cent of the company’s total floating shares, so the amount of covered warrants was too small to make an impact on the underlying stock prices, he said.
The State Securities Commission regulated the trading price of a covered warrant based on the underlying stock’s five-day average price, Dung said.
“That makes it difficult for anyone to manipulate the price of covered warrants,” he said.
Individual investors should not worry about securities firms colluding with group of buyers to control the price of covered warrants as it would be too costly for them, he added.
“If any investor wants to buy covered warrants manipulate prices, securities firms will ask the State Securities Commission to allow them to issue more covered warrants to stabilise prices,” he said.