Warrants Commentary (29 October to 1 November)
Last week, overall warrants turnover shrank by 33.9% to RM203.1mil, partly due to the shorter week, in conjunction with the Deepavali holiday on Monday (28 Oct). Warrants over indices including the Hang Seng Index (HSI), FBM KLCI Index (FBMKLCI), S&P 500 Index (SP500) and the iShares China A50 Index ETF (China A50 ETF) make a combined turnover of RM152.8mil, contributing slightly over 76% of turnover.
Major headlines last week largely revolved around the widely anticipated news on the interest rate cut by the US Federal Reserve (Fed) by another 25 basis points or 0.25%, lowering the target benchmark rate to between 1.5% and 1.75%. Despite the move, US President Trump seemed dissatisfied as he has been pressing the central bank to slash rates for more than a year and has said that the Fed should cut rate to zero or below (The New York Times, 30 Oct). He tweeted last Friday (1 Nov) that “we should have lower interest rates than Germany, Japan and all others” and added that “China is not our problem, the Fed is.”
Additionally, the US released its better-than-expected jobs data which showed 128,000 jobs added in October, resulting in the SP500 closing the week at record levels, jumping 1.0% to close at 3,066.9 points; week-on-week (w-o-w), the SP500 rose 1.5%. Likewise on Friday, the HSI rose 0.7% to close above the 27,000 level at 27,100.8 points, up 1.6% w-o-w.
The call warrant HSI-C7F and put warrant HSI-H8B remained investors’ favorites as they scored the highest trading volumes of above 100mil units each. Investors who bought HSI-C7F in the previous week were seen taking profit as they net sold 14.0mil units of this warrant which rose 18.0% w-o-w. In contrast, investors net bought 12.1mil units of HSI-H8B as the warrant plunged 48.6% w-o-w, closing at RM0.090 last Friday.
On the local front, the warrant over MY E.G Services (MYEG), MYEG-C82 caught investors’ interests, becoming the top traded warrant over Malaysian counters with a total 96.2mil units traded. MYEG-C82, which fell 3.4% w-o-w saw investors net buying over 23.6mil units. Over the first two days of the week, MYEG’s share price skidded 11.2%, before rebounding a total 8.4% later in the week; MYEG shares fell 3.4% w-o-w.
Top warrants by volume traded:
|Issuer||Exercise level / price||Expiry date|
|HSI-C7F||160.1||Macquarie||27,400||30 Dec 2019|
|HSI-H8B||147.0||Macquarie||25,600||28 Nov 2019|
|MYEG-C82||96.2||Macquarie||1.45||31 Mar 2020|
|HSI-H8F||95.6||Macquarie||26,400||30 Dec 2019|
|HSI-H8E||81.4||Macquarie||24,600||30 Dec 2019|
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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.