Last week’s overall warrants turnover came in 17.2% higher at RM690.0mil as interest in glove makers such as Supermax and Top Glove partially returned. On top of that, wider interest in warrants over other Malaysian companies such as Mr D.I.Y. Group, MY E.G. Services and electronics manufacturing services (EMS) providers such as V.S. Industry and Inari Amertron also contributed to the surge in turnover. Warrants over foreign underlyings also gained some traction last week.
Call warrant over Supermax, SUPERMX-C1I, took the crown last week with 171.4mil units traded as the underlying shares traded lower for the majority of last week following the 6.8% surge on Monday, ending the week at RM8.29, 2.7% lower week-on-week (w-o-w). Further, MEITUAN-C1, the call warrant over Meituan, which operates a web based shopping platform and is listed on the Hong Kong market, made an appearance in the top warrants list with 77.9mil units traded for the week.
Do note that as of 7 December 2020, Budweiser, Anta Sports and Meituan will become component stocks of the Hang Seng Index (HSI), displacing Swire Pacific. The HSI dipped 2.0% on Monday, snapping its 6-day winning streak, but largely clawed back its losses over the week on data showing rapid acceleration in factory activity in China and as investors continued to hope for a COVID-19 vaccine (Reuters, 1 Dec). The HSI finished the week at 26,835.92 points, a slight 0.2% lower w-o-w.
Warrants over the HSI, which allow bullish and bearish investors to gain leveraged exposure to the broader Hong Kong market without leaving Bursa Malaysia, clinched the 2nd and 4th spot among the top traded warrants by volume last week. Call warrant HSI-CBH saw 84.8mil units traded while put warrant HSI-HDJ saw 77.3mil units traded. Call warrants move in line with the underlying, while put warrants move in an opposite direction to the underlying. Both warrants are out-of-the-money and expiring soon on 30 December 2020, resulting in them having lower absolute warrant prices and thus require a smaller capital outlay. However, investors should note that warrants expiring soon tend to experience a higher rate of time decay, resulting in higher holding costs for investors if such warrants are held for longer than a day. Investors should switch to warrants with longer time to expiry to avoid incurring higher holding costs.
Top warrants by volume traded:
|Issuer||Exercise level/price||Expiry date|
|SUPERMX-C1I||171.4||Kenanga||14.00||26 Jul 2021|
|HSI-CBH||84.8||Macquarie||28,000||30 Dec 2020|
|MEITUAN-C1||77.9||RHB||280.00||29 Mar 2021|
|HSI-HDJ||77.3||Macquarie||25,400||30 Dec 2020|
|VS-C30||70.2||Kenanga||1.06||22 Mar 2021|
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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.