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Investors ‘put’ the Hang Seng Index as it breaches 30,000

macquarie structured warrants 20200914

The Malaysia warrants market posted a 22.3% week-on-week (w-o-w) decline in terms of turnover at RM313.1mil last week. Warrants over stocks continued to dominate the warrants space with RM223.8mil traded which account for 71.5% of the total warrants turnover. Meanwhile, the Hang Seng Index (HSI) warrants saw an uptick in trading interest last week at RM76.3mil which is 11.3% higher than the prior week.

On the local front, warrants over glove makers Top Glove and Supermax were again investors’ favourite last week given the higher volatility in share prices lately. Investors who saw the decline in Top Glove and Supermax share price as trading opportunities have traded a total of 131.5mil units of TOPGLOV-C84 and 39.8mil units of SUPERMX-C1A which propelled these two warrants into the top 5 active warrants list. Do take note that both call warrants will be expiring on 29 Jan 2021, which is a week from the time of writing. Generally, warrants with shorter time to expiry will experience higher time decay which can be translated to a higher level of risk compared to longer dated warrants.

Last week, the HSI carried on its outstanding performance in the first two weeks of the year to trade above the 30,000 level for the first time since late April 2019. The January HSI futures started the week strong and finished in the positive territory from Monday till Thursday. Despite closing lower 1.5% lower at 29,461.0 on Friday, the HSI futures is still up 3.1% w-o-w. Macquarie’s put warrants HSI-HDO and HSI-HDT secured the second and third spot on the most popular warrants list with 126.0mil and 123.9mil units traded. Among the two puts, bearish investors took home 4.0mil units of HSI-HDT in anticipation for a market correction. On the other hand, holders of another active warrant HSI-CBQ, took profit on the call warrant as the bid price surged 35.5% w-o-w to track the positive gains in the underlying. Call warrants move in line with the underlying while put warrants more in an opposite direction to the underlying.

Top warrants by volume traded:

Warrant nameVolume
IssuerExercise level/priceExpiry date
TOPGLOV-C84131.5CIMB6.0029 Jan 2021
HSI-HDO126.0Macquarie27,80029 Jan 2021
HSI-HDT123.9Macquarie26,80025 Feb 2021
HSI-CBQ68.8Macquarie30,60025 Feb 2021
SUPERMX-C1A39.8CIMB4.5029 Jan 2021

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Provided for Malaysian residents information only. This commentary has not been reviewed by the Securities Commission Malaysia. It is not an offer or recommendation to trade and is not research material. Past performance is not indicative of future performance. You should make your own assessment and seek professional advice. The Warrants will not be offered to any US persons.