Once again, warrants over the Hang Seng Index (HSI) were actively traded last week; the put warrant HSI-HGK took the top spot with RM52.2mil or 298.2mil units traded, while the call warrant HSI-CFK was second in line with RM34.4mil or 149.4mil units traded. The HSI warrants saw its turnover more than double to RM122.9mil from the previous week, comprising 46.4% of last week’s total warrants turnover of RM265.0mil.
The HSI April 2021 futures, over which Macquarie’s HSI warrants track, started the week in the red by falling 0.8% last Monday before rising 0.4% and 1.4% on Tuesday and Wednesday respectively to close at 28,915. On Wednesday, the Chinese government issued warnings to 34 other technology companies to instil anti-monopoly practices and adhere to antitrust regulations, following its USD2.75bil fine on Alibaba over the previous weekend. Following the fine and warnings, the HSI’s rebound was supported by the rally in Chinese technology stocks as there is now more clarity from regulators on the framework and how to approach the new practices. The futures then lost 0.5% on Thursday and rebounded 0.7% on Friday to finish the week at 28,983, 1.2% higher week-on-week (w-o-w). On Friday alone, bearish investors net bought 22mil units of put warrant HSI-HGK.
Investors should take note of the expiry dates of the top traded warrants HSI-HGK, HSI-CFK and HSI-CFH. HSI-HGK and HSI-CFH both expire on 28 May 2021 while HSI-CFK expires on 29 June 2021. Warrants with shorter time to expiry tend to experience an increased rate of time decay, resulting in higher holding costs to investors. Investors may consider warrants with longer time to expiry to reduce their holding costs. Time decay occurs on a day-to-day basis and does not affect investors who buy and sell the warrants within a trading day.
On the local front, glove companies returned to attention last week as their shares rallied with Covid-19 cases continuing to rise globally. Supermax shares rose 16.2% w-o-w to close at RM5.31 on Friday, while Top Glove shares increased 6.5% w-o-w to end the week at RM5.57. Call warrants SUPERMX-C98 and TOPGLOV-C1L were in the top traded warrants list last week, clocking in turnovers of RM14.1mil and RM9.7mil respectively.
Top warrants by value traded:
|Warrant name||Value (RM’mil.)||Issuer||Exercise level/price||Expiry date|
|HSI-HGK||52.2||Macquarie||27,000||28 May 2021|
|HSI-CFK||34.4||Macquarie||31,000||29 Jun 2021|
|SUPERMX-C98||14.1||Kenanga||4.50||31 May 2021|
|HSI-CFH||13.4||Macquarie||30,200||28 May 2021|
|TOPGLOV-C1L||9.7||Macquarie||4.88||8 Oct 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.