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HSI calls popular amid Hong Kong market selldown

Bullish investors were accumulating HSI call warrants last Monday and Tuesday as the HSI futures plunged more than 2,200 points on the first 2 trading days of the week to finish at 24,972 on Tuesday, the lowest level since 5 November 2020
macquarie structured warrants 20200914

Last week, the Malaysia warrants market saw a surge in trading interest as the weekly turnover jumped 79.5% week-on-week (w-o-w) to RM247.0mil, out of which the Hang Seng Index (HSI) warrants contributed to 50.7% of the total turnover with RM125.3mil traded. 

Bullish investors were accumulating HSI call warrants last Monday and Tuesday as the HSI futures plunged more than 2,200 points on the first 2 trading days of the week to finish at 24,972 on Tuesday, the lowest level since 5 November 2020. A selloff in Chinese private education companies last Monday sent shockwaves through the equity market in China and Hong Kong as investors scrambled to price in growing risks from an intensifying crackdown by Beijing on the nation’s industries, which include the technology and property sector (Bloomberg, 26 Jul). More than half a dozen HSI call warrants were sold out at the end of the trading day on Tuesday. Investors should trade warrants that are sold out or close to being sold out with caution. 

On Thursday, China stepped up attempts to calm investors’ nerves after the recent market rout by informing foreign brokerages not to “overinterpret” its latest regulatory actions, setting the stage for a rebound in the beaten-down Chinese and Hong Kong stocks (Bloomberg, 29 Jul). The top traded call warrants HSI-CIK and HSI-CIF saw their bid prices rebound to RM0.205 and RM0.250 respectively on Thursday, which is 70.8% and 72.4% higher from Tuesday’s close, tracking the 1,231 points recovery in the HSI futures over the same period. There was also a HSI put warrant which made it to the top 5 warrants list last week. HSI-HGV recorded a large 214.3% weekly gain as the HSI futures finished 4.8% lower w-o-w.

Last Friday, the local benchmark FBMKLCI futures finished below the 1,500 level for the first time since November 2020, fuelled by growing political uncertainty and the rising number of Covid cases in Malaysia in the past week. Call warrant DNEX-CF with an exercise of RM0.900 was the most popular warrant over local stocks with a turnover of RM11.6mil. Investors also showed interest in other DNEX call warrants, namely DNEX-CG, DNEX-CA, and DNEX-CB.

Top warrants by value traded: 

Warrant nameValue
(RM’mil.)
IssuerExercise level/priceExpiry date
HSI-CIK35.1Macquarie29,00029 Nov 2021
HSI-CIF30.8Macquarie28,00028 Oct 2021
HSI-HGV14.8Macquarie25,80030 Aug 2021
HSI-CIG13.2Macquarie26,00028 Oct 2021
DNEX-CF11.6Kenanga0.90030 May 2022

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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