Google Listed In Malaysia

When anyone looks at the post title, they must be wondering if there is a typo error....in fact, make no mistake, it is indeed the famous America-based World No 1 Internet Search Engine powerhouse, Google Inc. The listing in Malaysia Kuala Lumpur Stock Exchange represents a Call Warrant, issued by OSK Investment Bank.

Google's previous day's share price closed at around USD670, which makes up almost USD210billion in market capitalization, which is even larger than the total market capitalization of some less developed countries. Considering its IPO price of USD85 in August 2004, the stock has achieved skyrocketing gain in slightly more than 3 years! Google derives its revenue almost entirely from advertisements linked to its Internet search engine although it is diversifying its sources of sales. For instance, Google has started to sell advertisements in video clips on YouTube, a website it acquired for US$1.65bil last year. Other notable acquisitions include Feedburner and Blogger.com, a popular free weblog system.

Coming back to the Call Warrants listed in Malaysia today, its share price shot up a staggering 140% from RM0.11 (USD0.03) to RM0.265 (USD0.08) with intra-day high at RM0.33(USD0.1) ! More than 6million shares changed hands, hence making it among the Top 5 most active stocks for the day! Now comes the interesting part...The warrants have a conversion ratio of 3,000 to 1, with an exercise price of US$680. This means an investor will need 3,000 Google call warrants plus US$680 – or a total of US$913 – for one ordinary Google share, which is currently trading at less than US$670. This suggests a premium of about 36%, which makes the call warrant very expensive indeed! I wonder if investors chasing these stocks are aware of such conversion terms! Based on my experience, chances are these investors (likely to be retail investors) are not aware of such terms when they bought the shares!