Warrants Commentary (6 to 10 January)
Happy New Year! The Malaysian warrants market started to warm up after the holiday season, with turnover for last week coming in at RM226.8mil. Turnover for warrants over the Hang Seng Index (HSI) remained a healthy 65.1% of turnover following the volatile week for the Hong Kong market. Meanwhile, warrants over stocks comprised 29.1% of the market, while warrants over the iShares China A50 Index ETF (China A50 ETF) made up 5.5% of the market.
Last week, the global markets were rocked by various news around the world. The HSI futures had a volatile week, starting the week with a 0.9% decline to 28,183 points on Monday due to news over the weekend that the US has killed one of Iran’s top military commanders. The futures rebounded 0.7% on Tuesday but then declined an additional 1.4% on Wednesday to 28,058 points on escalating tensions between the US and Iran. Bearish investors bought the HSI put warrants, namely 17.9mil units of last week’s top traded warrant HSI-H8K, while taking profit in the HSI calls warrants.
On Thursday and Friday, the futures enjoyed a bullish run as the US-Iran tensions eased, coupled with optimism of a trade deal between US and China. The futures closed 2.2% higher over these two days to finish the week at 28,666 points, erasing the previous losses and closing 0.8% higher week-on-week (w-o-w). On Thursday, investors bought an additional 9.2mil units of HSI-H8K, causing this warrant to be sold out. Investors should exercise caution when trading sold out warrants, as the market price of these warrants may be inflated by other investors bidding in the market. Investors should check the live matrix to see the fair price of a warrant before trading.
Over the week, investors traded 278.1mil units of put warrant HSI-H8K, and 175.7mil and 105.1mil units of call warrants HSI-C7J and HSI-C7K, respectively.
On the local front, the top stock warrant by volume traded was the call warrant over FGV Holdings (FGV), FGV-C86, which saw 38.2mil units traded last week. The share price of FGV fell for the first three days of last week, then rose over the last two days to end the week at RM1.53, 1.9% lower w-o-w. Investors net bought 8.9mil units of FGV-C86 over last week.
Top warrants by volume traded:
|Issuer||Exercise level/price||Expiry date|
|HSI-H8K||278.1||Macquarie||27,000||27 Feb 2020|
|HSI-C7J||175.7||Macquarie||30,000||27 Feb 2020|
|HSI-C7K||105.1||Macquarie||28,000||27 Feb 2020|
|FGV-C86||38.2||Macquarie||1.65||19 Jun 2020|
|A50CHIN-C50||37.9||Macquarie||15.50||31 Mar 2020|
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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.