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Glove makers continue to take centre stage

macquarie structured warrants 20200914

Warrants Commentary (9 Jun to 12 Jun)

The second week of June saw the total warrants turnover coming in at a staggering RM699.4mil despite it being a holiday-shortened week as the Bursa Malaysia was shut on Monday (8 Jun) for the official birthday of the Yang di-Pertuan Agong.  Warrants over Malaysian shares took the spotlight last week, with a trading value of RM573.5mil, making it the major contributor to the overall warrants turnover. This was followed by warrants over the Hang Seng Index (HSI) with a value traded of RM82.1mil, representing approximately 11.7% of the total warrants turnover while warrants over the FBM KLCI, S&P 500® Index (SP500) and iShares FTSE A50 China Index ETF constituted approximately 6.3% with a value traded of RM43.8mil.

It was another volatile week for the markets roiled by fears of economic uncertainty amid a resurgence of Covid-19 cases in the US, coupled with the grim US economic forecast by the Fed, as major benchmarks such as the Dow Jones Industrial Average and the SP500 snapped their three-week winning streak to finish the week down by 5.6% and 4.8% respectively. The HSI futures was not spared either as it ended the week in red territory, down by almost 2% to 24,212.0. Although the HSI futures moved higher the first three days of the week, the upbeat momentum was halted on Thursday through Friday as prices succumbed to furious selling activities, wiping all of its gains for the week.

Amidst the turmoil, put warrant HSI-HAV (+3.6% week-on-week (w-o-w)) dominated the warrants space as the most actively traded warrant with 102.1mil units or RM29.6mil traded for the week. Call warrant HSI-C9S was also among the most actively traded warrants with 67.3mil units changing hands as investors net bought up to 14.9mil units for the week. HSI-C9S saw a turnover of RM9.1mil as it tumbled 32.5% w-o-w.

On the local front, warrants over glove makers continued to dominate the warrants market with TOPGLOV-C78 and TOPGLOV-C77 clocking in 78.2mil units (RM54.8mil) and 70.9mil units (RM57.8mil) traded respectively, as the stock continued to scale fresh peaks, closing 3.2% up for the week at RM16.90 after it reported its net profit rising more than fourfold in Q3 ended 31 May 2020. SUPERMX-C93 was also actively traded with 55.1mil units changing hands as the stock tumbled 10.9% w-o-w to close at RM7.91 on Friday.

Top warrants by volume traded:

Warrant nameVolume
(mil.)
IssuerExercise level / priceExpiry date
HSI-HAV102.1Macquarie20,00030 Oct 2020
TOPGLOV-C7878.2Maybank14.0026 Feb 2021
TOPGLOV-C7770.9CIMB10.7031 Dec 2020
HSI-C9S67.3Macquarie27,60028 Aug 2020
SUPERMX-C9355.1Maybank7.0026 Feb 2021

If you have any questions or need further assistance, please do not hesitate to contact us via our hotline at 03-2059 8840 or email us at [email protected]

To view the full list of structured warrants available on Bursa Malaysia, kindly visit malaysiawarrants.com.my

Provided for Malaysian residents information only. 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.

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Bargain hunting activities emerged on the glove counters after more than one week of pullback, lifting the FBM KLCI and the healthcare sector higher. Market will be looking forward to the second Monetary Policy Committee meeting today to gauge market movements. However, economists anticipate an unchanged stance on the Overnight Policy Rate (OPR) amid expectation of an economic recovery. We believe the lower liners will continue to remain upbeat if the positive market sentiment persists. Meanwhile, the Brent oil price has seen a rebound.

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Streched valuations

Bucking the downturn across the regional markets, the FBM KLCI ended modestly higher as continued selling in glove heavyweights were offset by buying support in IHH and selected banking heavyweights. We believe the local bourse should trade in an upward bias tone following the change of MCO status for Selangor, Johor, Penang and KL. Meanwhile, the number of Covid-19 confirmed cases daily has dropped to year-to-date low. However, note that the negative sentiment on Wall Street overnight could cap the upside potential on the local front.

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Technical Focus – LHI

One of the largest fully integrated producers of poultry, eggs and livestock feed in Southeast Asia with strong presence in Malaysia, Indonesia, Vietnam and Singapore. Committed to expand the Malaysia, Philippines and Vietnam operations via additional capacities and infrastructures, whilst targets 160 Baker’s Cottage outlets by end-FY21 (from 103 outlets since end-FY20). Sequential earnings recovery is on the table, premised to the stabilising poultry prices in Malaysia as well as Indonesia in recent months. Technically, the flag-formation breakout above RM0.71 may lead price towards the immediate resistances at RM0.775-0.82, with long term target at RM0.885.

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