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Warrants over glove makers start the new year roaring

The first week of 2021 saw the Malaysia warrants market clocking in an overall turnover of RM404.9mil with warrants over single stocks making up over 79.6% of the total turnover while warrants over the Hang Seng Index came in second, constituting up to 14.4%. Warrants over other indices and foreign underlyings made up the rest of the total turnover for the week.
macquarie structured warrants 20200914

The first week of 2021 saw the Malaysia warrants market clocking in an overall turnover of RM404.9mil with warrants over single stocks making up over 79.6% of the total turnover while warrants over the Hang Seng Index came in second, constituting up to 14.4%. Warrants over other indices and foreign underlyings made up the rest of the total turnover for the week. 

As Covid-19 cases in the country continued to mount, there was renewed interest in the rubber glove makers which were badly hammered over the last quarter of 2020. On Friday, shares of glove makers stole the show as they gained ground and outperformed the market. Rubberex Corporation led gains with a whopping 29.7% rally to close at RM1.92 in its best day since August 2020. Shares of Supermax Corporation and Comfort Gloves also jumped by an impressive 20.7% and 17.5% respectively while the world’s biggest glove producer Top Glove Corporation soared 12.1% to end at RM6.50 buoyed by strong buying activities. 

Amid the renewed interest in the rubber glove sector, call warrants over glove makers also saw traction with TOPGLOV-C83 and TOPGLOV-C84 registering a total traded volume of 100.2mil and 92.0mil respectively as they take the second and third mostly actively traded warrants for the week. TOPGLOV-C83 was also the week’s top warrant in terms of total value traded at RM41.6mil. Meanwhile KOSSAN-C7 and TOPGLOV-C98 came in at fourth and fifth place with up to 61.1mil and 56.3mil units exchanged hands. 

That aside, the Hang Seng Index also kicked start the year with a bang as it soared an impressive 2.4% for the week to end at 27,878.23 on Friday. The gains also saw the spot month January futures contract surging by 2.1% for the week to finish at 27,801, with 4 out of 5 trading days closing in positive territory. Following the upbeat performance in the underlying, the near expiring put warrant HSI-HDN witnessed up to 147.1mil units traded, landing it on the top spot of the most active list.

Top warrants by volume traded:

Warrant nameVolume
(mil.)
IssuerExercise level/priceExpiry date
HSI-HDN147.1Macquarie25,80029 Jan 2021
TOPGLOV-C83100.2Kenanga7.031 May 2021
TOPGLOV-C8492.0CIMB6.029 Jan 2021
KOSSAN-C761.1Kenanga4.026 Apr 2021
TOPGLOV-C9856.3Maybank8.630 Sep 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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The FBM KLCI settled in red in tandem with the regional peers as selling pressure in the glove stocks returned, offsetting the gains on the banking heavyweights following the unchanged Overnight Policy Rate (OPR) by Bank Negara Malaysia. Tracking the losses on Wall Street overnight, we expect the local bourse may continue to consolidate further as market players are likely to trade on a cautious tone on the broader market. Nevertheless, we expect traders to position themselves for the recovery theme as Covid-19 vaccination is taking place. Meanwhile, the Brent oil price has surged firmly above USD65.

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Bargain hunting activities emerged on the glove counters after more than one week of pullback, lifting the FBM KLCI and the healthcare sector higher. Market will be looking forward to the second Monetary Policy Committee meeting today to gauge market movements. However, economists anticipate an unchanged stance on the Overnight Policy Rate (OPR) amid expectation of an economic recovery. We believe the lower liners will continue to remain upbeat if the positive market sentiment persists. Meanwhile, the Brent oil price has seen a rebound.

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Bucking the downturn across the regional markets, the FBM KLCI ended modestly higher as continued selling in glove heavyweights were offset by buying support in IHH and selected banking heavyweights. We believe the local bourse should trade in an upward bias tone following the change of MCO status for Selangor, Johor, Penang and KL. Meanwhile, the number of Covid-19 confirmed cases daily has dropped to year-to-date low. However, note that the negative sentiment on Wall Street overnight could cap the upside potential on the local front.

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Technical Focus – LHI

One of the largest fully integrated producers of poultry, eggs and livestock feed in Southeast Asia with strong presence in Malaysia, Indonesia, Vietnam and Singapore. Committed to expand the Malaysia, Philippines and Vietnam operations via additional capacities and infrastructures, whilst targets 160 Baker’s Cottage outlets by end-FY21 (from 103 outlets since end-FY20). Sequential earnings recovery is on the table, premised to the stabilising poultry prices in Malaysia as well as Indonesia in recent months. Technically, the flag-formation breakout above RM0.71 may lead price towards the immediate resistances at RM0.775-0.82, with long term target at RM0.885.

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