Japanese Warrants
The only reason that I have created this page, is so that there is a history on a certain aspect of markets and how things come and go in fashion.
The only reason that I have created this page, is so that there is a history on a certain aspect of markets and how things come and go in fashion.
As I always say, 'With research you gain knowledge. Without it, you gain experience.' Amen.
As I always say, 'With research you gain knowledge. Without it, you gain experience.' Amen.
Here is a very good article on the rise and fall of the Japanese Warrant market, of which I was a big player in the London Secondary Market, before the bubble burst.
Here is a very good article on the rise and fall of the Japanese Warrant market, of which I was a big player in the London Secondary Market, before the bubble burst.
Basically, the warrants were issued as part of a package, with a bond being issued with warrants attached.
Basically, the warrants were issued as part of a package, with a bond being issued with warrants attached.
The warrant part, was able to become 'un stapled' and got an independant listing to the bond.
The warrant part, was able to become 'un stapled' and got an independant listing to the bond.
The theory was that because the Japanese share market had been on such a rise, the 'out of the money' warrants would become 'in the money' before their expiry and the exercising of the warrants would give the company enough money to repay the bond out, when due.
The theory was that because the Japanese share market had been on such a rise, the 'out of the money' warrants would become 'in the money' before their expiry and the exercising of the warrants would give the company enough money to repay the bond out, when due.
These warrants were issued at premiums of 30% or so, which meant that if a stock was at 100, the price would have to rise to 130 before the warrants became 'in the money'.
These warrants were issued at premiums of 30% or so, which meant that if a stock was at 100, the price would have to rise to 130 before the warrants became 'in the money'.
When the bubble burst, the warrants became worthless and this meant none would get exercised, so the bond issuing company could pay out the bonds.
When the bubble burst, the warrants became worthless and this meant none would get exercised, so the bond issuing company could pay out the bonds.
The blind belief that the Japanese market would rise forever became its downfall and this folly of an attitude only accelerated it even more.
The blind belief that the Japanese market would rise forever became its downfall and this folly of an attitude only accelerated it even more.
There is an excellent historical magazine that captures the whole market's ups and downs over a 40 year period. See below.
There is an excellent historical magazine that captures the whole market's ups and downs over a 40 year period. See below.
Here is an example of the warrants that tend to trade back in 2014. You can see their 4 digit code with the -9 being used to symbol that it is a warrant and not an equity. So, it still goes on but about a 90th of the size it used to be.
