Warrants Commentary (15 July to 19 July)
Last week was a quieter week for the warrants market, with turnover clocking in at RM400mil, 7.6% lower than the previous week, due to lower volumes throughout. However, we saw heightened activity in selected warrants over Malaysian shares, namely Ekovest and Petronas Chemical (PCHEM), while warrants over My E.G. Services (MYEG) remained popular.
The call warrant EKOVEST-CU saw 65.5mil units traded, earning the top spot for warrants over Malaysian shares in terms of volume traded. The shares had a turbulent week, starting the week with a 0.6% dip, followed by a 7.5% surge to RM0.860 on Tuesday. The shares then fell over the following 2 days, before ending 1.2% higher on Friday. Ekovest shares were up 3.7% week-on-week (w-o-w), while EKOVEST-CU’s bid price rose 7.7% w-o-w.
While MYEG-C68 expectedly secured a position in the top warrants list, the call warrant PCHEM-C33 saw a rush in activity as PCHEM shares fell in the first four days of last week, closing at RM7.62 on Thursday, down 9.5% week-to-date. Investors scrambled to collect this warrant, buying 29.1mil units over four days, as the warrant bid price tumbled 58.3% to RM0.025 in the same period. On Friday, the shares rebounded slightly, closing 2.5% higher to RM7.81, while PCHEM-C33’s bid price rose 20% to RM0.030.
Meanwhile, warrants over the Hang Seng Index (HSI) continued to make up a large proportion of the market’s turnover, led by call warrant HSI-C5P with 200.4mil units traded and put warrant HSI-H6R with 182.1mil units traded. The HSI futures closed largely mixed last week, though the 1.4% rise on Friday to 28,821.0 points saved the futures from closing in the red as it ended the week 1.0% higher w-o-w. Bearish investors collected 6.6mil units of HSI-H6R on Friday alone, and close to 11mil units over last week.
In addition, call warrant HSI-C5J, with a slightly in-the-money exercise level of 28,800, came in third on the overall top warrants list with 179.5mil traded. Investors should note that this warrant will expire on the following Tuesday, 30 July 2019, and the last date to trade this warrant is this coming Thursday, 25 July 2019. Do exercise caution when trading warrants that are close to expiry as warrants tend to experience faster time decay (or faster erosion in the time value of a warrant) as they approach expiry.
Top stock warrants by traded volume:
|Issuer||Exercise price||Expiry date|
|EKOVEST-CU||65.5||Macquarie||1.10||20 Dec 2019|
|MYEG-C68||59.0||Macquarie||1.85||31 Oct 2019|
|PCHEM-C33||48.1||Macquarie||8.88||31 Jan 2020|
|MYEG-C65||32.4||Macquarie||1.50||30 Sep 2019|
|AIRASIA-C86||25.3||Kenanga||3.00||31 Jan 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.