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Call and put warrants for bullish or bearish views

macquarie structured warrants 20200914

With the public holiday last Tuesday in conjunction with Awal Muharram, total warrants turnover last week saw a 12.5% decline week-on-week (w-o-w), though the average daily turnover rose from RM38.4mil in the previous week to RM42mil last week. As the FBM KLCI continues to languish around the 1,500-level, investors shifted their focus to the broader markets, with index warrants taking up 56.6% of last week’s turnover versus 52.5% in the previous week, and warrants over the Hang Seng Index (HSI) taking up a majority of turnover.

Call warrant HSI-CIK was once again the top warrant with RM22.8mil and 133.8mil units traded. Last week, the HSI kicked off on a strong note, rising for three consecutive days, but failed to maintain its momentum as it fell on Thursday and Friday to end the week at 26,391.62 points, up a slight 0.8% w-o-w. Bullish investors net bought 12mil units of HSI-CIK with the dip, after having sold over 13mil units on Monday and Tuesday with the HSI’s rise. On the flipside, they bought HSI puts such as HSI-HG1 and HSI-HGV as the index rose, and took profit as the index fell later in the week. Hong Kong market sentiments continue to be dampened by the regulators’ heavy scrutiny, with heavyweights such as Alibaba, Tencent and Meituan performing poorly in recent months. Bullish or bearish investors may also gain leveraged exposure to specific Hong Kong listed companies with call and put warrants over Hong Kong shares.

On the local front, warrants over Dagang NeXchange (DNEX) such as DNEX-CG and DNEX-CF were actively traded last week, fuelled by the company’s announcement on Bursa that its unit won a contract valued at RM88mil from the Ministry of Finance in relation to the government’s accounting system. Despite that, DNEX shares fell 4.8% w-o-w last week to RM0.785, failing to maintain its momentum from the strong rally in the previous week. 

Meanwhile, MY E.G. Services (MYEG) also said in a filing to Bursa that it has introduced decentralised finance (“DeFi”) services, leveraging on the power of blockchain technology to bring accessible, affordable and efficient cryptocurrency services, pushing call warrant MYEG-C1T into last week’s top five warrant list as the underlying rose 3.1% w-o-w to finish at RM1.64 on Friday. Other popular Malaysian underlyings last week include Inari Amertron, Greatech Technology and JAKS Resources. 

Top warrants by volume traded:

Warrant nameVolume (‘mil.)IssuerExercise level/priceExpiry date
HSI-CIK133.8Macquarie29,00029 Nov 2021
HSI-CIF102.1Macquarie28,00028 Oct 2021
DNEX-CG84.0Kenanga1.2030 May 2022
HSI-CIE63.7Macquarie30,00028 Oct 2021
MYEG-C1T60.7Maybank2.2228 Feb 2022

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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.