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Investors look to puts for downside protection

The warrants market in Malaysia witnessed yet another exciting week with RM1.6bil traded. Despite a shorter trading week as the market is shut on Friday in conjunction with the Hari Raya Haji celebration, the total turnover is up 7.6% week-on-week (w-o-w) as investors continue to favour warrants over Malaysian stocks such as Hartalega Holdings, Topglove Corporation and many more.
macquarie structured warrants 20200914

The warrants market in Malaysia witnessed yet another exciting week with RM1.6bil traded. Despite a shorter trading week as the market is shut on Friday in conjunction with the Hari Raya Haji celebration, the total turnover is up 7.6% week-on-week (w-o-w) as investors continue to favour warrants over Malaysian stocks such as Hartalega Holdings, Topglove Corporation and many more. 

Call warrants over Hartalega dominated the warrants space last week with HARTA-C48 and HARTA-C53 taking the first and second spot on the top traded warrants list with RM95.5mil and RM92.3mil traded, respectively. The share price of Hartalega Holdings recorded a 14.7% w-o-w gain, right behind Kossan Rubber Industries’ outstanding 27.5% w-o-w gain last week.

There was a surge in demand for put warrants over the FBM KLCI last week, especially put warrant FBMKLCI-HAM which took center stage with RM7.7mil traded. The local benchmark’s futures contract traded higher for the first 3 days of the week before reversing some of its gains to close below the 1,600 level on Thursday. The 0.8% fall in the FBM KLCI July futures last Thursday came right after UMNO’s decision to not formally join Perikatan Nasional if the ruling pact registers as a formal coalition, though UMNO President Datuk Seri Dr Ahmad Zahid Hamidi added that this does not mean that UMNO is withdrawing its support from the government (The Star, 30 July). Investors took home more than 3mil units of FBMKLCI-HAM last Thursday to hedge against the rising political uncertainty as put warrants move in the opposite direction to the underlying share or index.

Meanwhile, warrants over the Hang Seng Index (HSI) saw a RM81.1mil turnover, which is 5.2% of the total Malaysia warrants market. Call warrant HSI-C9T emerged as the most active HSI warrant with RM20.4mil traded. Bullish investors took the opportunity of the sluggish performance in the HSI futures on Monday (27 Jul) to collect 6.4mil units of this call warrant, which resulted in it being fully sold out. Investors subsequently sold back a total of 13.6mil units of this warrant on Tuesday and Wednesday as the HSI futures rebounded above the 24,900 level, causing it to be removed from the sold out list.

Top FBMKLCI warrants by value traded:

Warrant nameValue
(RM ‘mil.)
IssuerExercise levelExpiry date
FBMKLCI-HAM7.7Macquarie1,53031 Dec 2020
FBMKLCI-H8Z2.7Kenanga1,55030 Nov 2020
FBMKLCI-H8R1.1Maybank1,50830 Oct 2020
FBMKLCI-C7Y0.8Kenanga1,65030 Nov 2020
FBMKLCI-C9O0.8Macquarie1,53029 Jan 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. 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.

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