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Put warrants as a potential hedge for market uncertainty

The HSI October futures were less volatile last week, range trading between 23,910 and 24,666. Despite the slow start, the benchmark Hong Kong futures finished 1.5% higher week-on-week (w-o-w) to 24,524 last Thursday. Investors were actively trading both the HSI calls and puts throughout the week where HSI-HG8 emerged as the most popular warrant with RM59.9mil traded. Put warrants generally move in the opposite direction to the underlying
macquarie structured warrants 20200914

The Malaysia warrants market posted a RM262.6mil turnover last week, which is 4.1% lower than the prior week. Warrants over the Hang Seng Index (HSI) continue to dominate the warrants space with a RM146.6mil turnover despite the shorter trading week as the Hong Kong market was shut on Friday (1 Oct) in conjunction with the National Day holiday. 

The HSI October futures were less volatile last week, range trading between 23,910 and 24,666. Despite the slow start, the benchmark Hong Kong futures finished 1.5% higher week-on-week (w-o-w) to 24,524 last Thursday. Investors were actively trading both the HSI calls and puts throughout the week where HSI-HG8 emerged as the most popular warrant with RM59.9mil traded. Put warrants generally move in the opposite direction to the underlying. Hence, bearish investors took the opportunity of the 28.1% plunge in the bid price of the put warrant to accumulate 6.0mil units last week. Meanwhile, call warrants HSI-CIG and HSI-CIV which posted 13.6% and 12.9% weekly gains respectively, were ranked second and third on the top traded warrants list.

In other news, warrants over the S&P 500® Index (SP500) gained some traction lately as the SP500 December futures fell more than 100 points w-o-w fuelled by concerns over inflation and the Federal Reserve’s signal that it will soon begin winding down its pandemic-era asset purchases (CNBC, 29 Sep). The bid price of SP500-HX soared RM18.5% to RM0.995 on the back of the US market weakness. Investors who are keen to hedge their portfolio against any uncertainty in the US market may consider this put warrant, which traded a total RM14.3mil units last week. 

On the local front, investors were heavily trading warrants over CTOS Digital (CTOS) as the share price of CTOS fell 5.0% last Friday following Bank Negara Malaysia’s decision to temporarily suspend the Central Credit Reference Information System (CCRIS) services to credit reporting agencies (The Edge Markets, 1 Oct). Amongst the CTOS call warrants, CTOS-CC was investors’ favourite with RM7.7mil traded followed by CTOS-CE with RM2.0mil turnover. Lastly, investors also showed vast interest in MYEG-C1W and GREATEC-CJ last week.

Top warrants by turnover:

Warrant nameTurnover
(RM ‘mil.)
IssuerExercise level/priceExpiry date
HSI-HG859.9Macquarie24,40028 Oct 2021
HSI-CIG22.9Macquarie26,60028 Oct 2021
HSI-CIV21.9Macquarie26,60028 Jan 2022
HSI-HG718.5Macquarie22,40028 Oct 2021
SP500-HX14.3Macquarie3,90021 Mar 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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macquarie structured warrants 20200914

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