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Good demand for HSI and KLCI warrants amid volatile market

Overall warrants turnover for the first week of March increased slightly by 3.2% week-on-week (w-o-w) to RM419.3mil, mainly driven by the increased trading activity in warrants over the Hang Seng Index (HSI) and FBM KLCI Index (KLCI) with both contributing a total of 34.5% of the total warrants turnover.
macquarie structured warrants 20200914

Overall warrants turnover for the first week of March increased slightly by 3.2% week-on-week (w-o-w) to RM419.3mil, mainly driven by the increased trading activity in warrants over the Hang Seng Index (HSI) and FBM KLCI Index (KLCI) with both contributing a total of 34.5% of the total warrants turnover.

The HSI index yoyo-ed throughout last week, moving between the positive and negative territory with fluctuation in bond yields. At the start of the week, the index rose 1.6% to surpass the 29,000 level, closing at 29,452.5 points before falling 1.2% on Tuesday. However, the index rebounded 2.7% on Wednesday, posting the biggest one-day gain since January, though it slid 2.6% for over the next two days, weighed down by investors’ fears on potential interest rate hikes and stock sell-off (Reuters, 5 March). 

Both HSI-HGK and HSI-CFK remained popular among investors with a total of 128.9mil units and 113.3mil units traded, respectively. At the end of the week, investors net bought 2.2mil units of HSI-HGK (unchanged) while they net sold 4.2mil units of the call warrant HSI-CFK (+10.1%).   

On the local front, Bank Negara Malaysia (BNM) decided to maintain the interest rate at its record low of 1.75% from its latest monetary policy meeting scheduled last Thursday (4 Mar). This decision was made based on BNM’s optimism on the global economic recovery, though still uneven, coupled with the country’s improvements in external demand and continued consumer spending. Further, the recent roll-out of domestic Covid-19 vaccine program may boost positive sentiments and economic activity. Following this, the local bourse KLCI closed slightly above the 1,600 level on Friday i.e. 1.2% higher at 1,600.1 points; the index rose 1.4% w-o-w. The put warrant FBMKLCI-HDA (+14.3%) with an exercise price of 1,550 was the most active warrant over KLCI with investors taking home 2.2mil out of 16.7mil units traded.  

Elsewhere, the rubber glove counters were volatile last week; Supermax tumbled 7.0% w-o-w while Top Glove fell 0.2% w-o-w. Call warrants SUPERMX-C1I and TOPGLOV-C1D managed to secure spots in the top 5 most active warrants last week. 

Top warrants by volume traded:

Warrant nameVolume
(’mil.)
IssuerExercise level/priceExpiry date
HSI-HGK128.9Macquarie27,00028 May 2021
HSI-CFK113.3Macquarie31,00029 Jun 2021
SUPERMX-C1I100.4KenangaRM14.0026 Jul 21
TOPGLOV-C1D83.8CIMBRM7.0030 Jul 2021
SUPERMX-C9880.3KenangaRM4.5031 May 21

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. 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.

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The FBM KLCI locked in third consecutive gains last Friday, as focus was shifted from glove counters to the telecommunication sector following Celcom-DiGi merger talks. Tracking the overnight improvement on Wall Street, the local bourse may trend on a slightly positive tone after hovering firmer above the critical 1,600 level. However, we believe the market sentiment will remain choppy amid rising Covid-19 cases (albeit the ongoing vaccine rollout plan for Covid-19), coupled with the development regarding the new wave of Covid-19 outbreak in some countries and Europe and Asia.

macquarie structured warrants 20200914

HSI-HGK dominates the warrants market

The Malaysia warrants market saw a total of RM233.3mil traded on the second week of April, which is 15.4% higher than RM202.1mil in the prior week. Out of which, the warrants over Malaysian underlyings were the largest contributor with RM167.4mil traded (71.8% to the total turnover) followed by warrants over the Hang Seng Index (HSI) with RM56.3mil traded (24.1% of total turnover) as the Hong Kong market was shut on Monday and Tuesday.

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Defending 1,600

The FBM KLCI posted mild gains yesterday as investors piled into glove heavyweights with the narrative of potential surge in demand for gloves amid the recent waves of Covid-19 outbreak in Europe and parts of Asia. Tracking the overnight gains on Wall Street, Nasdaq especially, we expect the positive sentiment to spill over to technology stocks on the local front. Commodities wise, the CPO prices saw a modest decline while the Brent oil price edged higher.

good-demand-for-hsi-and-klci-warrants-amid-volatile-market-m-online