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Volatility in Hong Kong market continues

With structured warrants over a wide range of local and foreign underlyings available on Bursa, investors may gain leveraged exposure to the broader local or foreign market with warrants over the indices, while warrants over stocks allow investors to gain leveraged exposure to specific listed companies.
macquarie structured warrants 20200914

Last week, the Hong Kong market remained volatile as concerns continue over the tightening restrictions by the Chinese government. Trading in warrants over the Hang Seng Index (HSI) remained active as they took up 55.2% of the week’s turnover. The total warrants turnover rose 50.8% week-on-week, partly due to the shorter trading week in the previous week, though the average daily warrants turnover rose 20.6% from RM44.6mil per day in the previous week to RM53.8mil per day last week. 

The HSI kicked off the week on a rather positive note last week, causing bullish investors to collect the HSI put warrants. On Thursday, news broke that the Chinese government will slow down the approval process for online games, causing the HSI to fall 2.3% to 25,716; investors took profit by net selling the HSI puts as they rose with the decline, while net buying the HSI calls, namely 18.5mil in the call warrant HSI-CIF, resulting in this warrant being fully sold out. 

However, the Hong Kong benchmark index managed to stage a 1.9% recovery on Friday to end the week at 26,205.91, netting a 1.2% increase for the week, causing investors to take profit on the HSI calls – HSI-CIF has 16.7mil in inventory once more – while net buying the HSI puts. Put warrant HSI-HG2 and call warrant HSI-CIF topped last week’s chart with 186.9mil and 156.5mil units traded, respectively.

With structured warrants over a wide range of local and foreign underlyings available on Bursa, investors may gain leveraged exposure to the broader local or foreign market with warrants over the indices, while warrants over stocks allow investors to gain leveraged exposure to specific listed companies. 

In Malaysia, warrants over Dagang NeXchange (DNEX) stole the spotlight yet again, with DNEX-CG coming in third last week with 67.4mil units traded. On Thursday, DNEX said it has been notified by the Malaysian Anti-Corruption Commission that several key management personnel of its semiconductor subsidiary SilTerra Malaysia has been arrested for possible graft, though it added that the business operations of SilTerra will not be affected, and there is no financial or operational impact on DNEX from the investigation. DNEX shares fell a slight 0.7% week-on-week to RM0.750.

Other than DNEX, warrants over Malaysian companies such as JAKS Resources, CTOS Digital and Hong Seng Consolidated were popular with investors, while warrants over Hong Kong listed companies such as Meituan and Tencent also saw active trading last week.

Top warrants by volume traded:

Warrant nameVolume (‘mil.)IssuerExercise level/priceExpiry date
HSI-HG2186.9Macquarie25,40029 Sep 2021
HSI-CIF156.5Macquarie28,00028 Oct 2021
DNEX-CG67.4Kenanga1.2030 May 2022
HSI-CIU49.5Macquarie28,60028 Jan 2022
HSI-CIG43.3Macquarie26,00028 Oct 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. The Warrants will not be offered to any US persons.

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