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Index warrants take the spotlight amid market volatility

macquarie structured warrants 20200914

Trading activity in structured warrants came in higher last week with the overall warrants market turnover climbing to RM129.6mil from RM80.6mil the previous week, which represented a 60.8% surge week-on-week (w-o-w). Trading turnover last week took on a switch with index warrants dominating the market and making up approximately RM69.9mil or 53.9% of the week’s turnover compared to 45.3% in the previous week.

Among the actively traded index warrants last week were the Hang Seng Index (HSI) warrants following the intense volatility which saw the underlying HSI July futures plunging by up to 4.6% from Monday through Friday to its lowest level in more than 6 months before gaining ground to end the week at 27,247 (-3.2% w-o-w) with 4 red days out of 5. Over the week, the heavy selling pressure saw fresh position taking and active trading activity with the call warrants HSI-CFQ and HSI-CFW, each recording 111.5mil and 98.1mil units traded, resulting in both warrants being close to sold out. Among others, HSI-HGR and HSI-CFR also topped the chart with up to 46.9mil and 31.7mil units traded respectively and taking the third and fifth place in the most active list.

Meanwhile on the local scene, warrants action continued to be subdued with investors remaining in cautious mode amid reports of rising Covid-19 infections despite the nationwide lockdowns coupled with political uncertainties. The benchmark FBMKLCI finished a third consecutive week in the red, plumbing to its lowest since November 2020 to end at 1,520.58 (-0.8% w-o-w). Among the top active warrants over Malaysian stocks last week was TOPGLOV-C1R with up to 34.3mil units traded as its underlying fell most of the week before closing higher on Friday at RM3.82 (-4.7% w-o-w) and recording a seventh straight weekly drop. Other warrants which saw good trading activity last week were the SP500-HU, DNEX-CB and MYEG-C1G each logging a total volume of 27.4mil, 21.9mil and 21.3mil units traded respectively. 

Top warrants by volume traded: 

Warrant nameVolume
IssuerExercise level/priceExpiry date
HSI-CFQ111.5Macquarie29,60029 Jul 2021
HSI-CFW95.1Macquarie30,40030 Aug 2021
HSI-HGR46.9Macquarie26,80029 Jul 2021
TOPGLOV-C1R34.3Macquarie3.8831 Jan 2022
HSI-CFR31.7Macquarie27,60029 Jul 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.