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HSI and Supermax warrants dominate the warrants space

macquarie structured warrants 20200914

The Malaysia warrants market saw a slow start in May with RM191.9mil traded last week, in line with the broader market. The local benchmark index fell to its lowest level (1,556) this year on Thursday before erasing some its losses to close at 1,587.45 on Friday. Investors remained cautious amid better-than-expected economic data and Bank Negara Malaysia’s decision to keep the overnight policy rate unchanged at 1.75% last week.

Warrants over Malaysia single stocks and the Hang Seng Index (HSI) took up a majority of last week turnover. Out of which, call warrants HSI-CFP and HSI-CFH were the top traded warrants with RM16.3mil and RM13.8mil turnover, respectively. Bullish investors took home more than 1.3mil units in HSI-CFP despite the HSI May Futures closing unchanged week-on-week. Bearish investors also showed vast interest in put warrant HSI-HGK which placed third on the top warrants list with RM10.4mil traded. In contrast to call warrants, put warrants generally move in an opposite direction to the underlying futures.

On the local front, Supermax call warrants were actively traded last week as the underlying took over headlines, reporting a RM1.0bil net profit for third quarter ended 31 Mar 2021 (The Edge Markets, 6 May 2021). The share price of Supermax plunged more than 12.8% on Thursday despite the financial results being just marginally lower compared to the prior quarter, as investors weighed Supermax’s statement with regard to its concerns over mounting pressure on gloves’ average selling prices and overcapacity. 

Call warrants SUPERMX-C98 and SUPERMX-C1Z were the fourth and fifth most active warrants last week as a result of the recent share price volatility. Between the two Supermax call warrants, SUPERMX-C1Z has a higher exercise price and longer expiry date. Assuming that all other factors are held constant, warrants with longer time to expiry generally experience slower time decay, meaning there is lower holding costs for investors. Other than that, call warrants COMFORT-CI, D&O-CI, SUPERMX-C2B and TOPGLOV-C1L also appeared on investors’ radar as their respective underlyings finished in the negative territory last week. 

Top warrants by value traded:

Warrant nameValue (RM’mil.)IssuerExercise level/priceExpiry date
HSI-CFP16.3Macquarie31,60029 Jul 2021
HSI-CFH13.8Macquarie30,20028 May 2021
HSI-HGK10.4Macquarie27,00028 May 2021
SUPERMX-C987.4Kenanga4.5031 May 2021
SUPERMX-C1Z7.0CIMB5.5030 Sep 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.