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Warrants over HSI and Sapura Energy draw investors’ interest

Warrants Commentary (26 Mar to 30 Mar)

The Hang Seng Index (HSI) had a good start to the week after suffering a 3.8% loss in the previous week. On Monday and Tuesday, the HSI surged 1.6% in total as markets generally recovered from concerns about trade friction between the U.S. and China. However, on Wednesday, it tumbled 2.5%; although it recovered 0.2% to close at 30,093.4 points, it was down 0.7% week-on-week (w-o-w). The Hong Kong market is closed 30 March and 2 April in conjunction with Good Friday and Easter Monday.

HSI warrants dominated the warrants space last week, recording a total turnover of RM165.5M, approximately 59.6% of overall warrants turnover of RM277.4M. Put warrant HSI-H4A remained popular, with 85.9M units traded throughout the week. At the end of the week, investors net sold 2.6M units of HSI-H4A, which fell 2.4% w-o-w. Bullish investors showed interest in call warrant HSI-C3B, accumulating 8.6M units out of the 81.6M units traded.

Moving on to the local scene, oil and gas services provider Sapura Energy posted their financial results, revealing a full-year FY18 net loss of RM2.5B (FY17: +RM208.3M).  President and group CEO Tan Sri Shahril Shamsuddin said the losses were on the back of impairment charges in its engineering and construction and drilling segments, which has no impact on cash, creating a lighter asset base for Sapura Energy.

Following the results announcement, investors reacted negatively, sending Sapura Energy’s share price down 8.3% to close at RM0.500 on Wednesday. The share price recovered on Thursday and Friday, soaring 9.0% as news broke that the group successfully outbid six other bidders for an offshore oil block in the Gulf of Mexico. The share price closed down 0.9% w-o-w to RM0.545.

Newly listed warrant over Sapura Energy, SAPNRG-C64, emerged as the most popular warrant with 143.6M units traded.  Investors net bought 18.9M units of SAPNRG-C64 which fell 5.6% w-o-w to RM0.085. SAPNRG-C64 has the longest tenor among warrants over this counter, expiring on 26 October 2018. Longer-dated warrants typically have lower gearing levels than shorter-dated warrants and experience slower time decay. Therefore (all other factors held constant), they tend to be of lower risk than warrants with lesser time to expiry.

 

Top 5 warrants by traded volume:

Warrant name Volume

(mil)

Issuer Exercise price (RM) / Exercise level Expiry date
SAPNRG-C64 143.6 Macquarie 0.500 31 Oct 2018
HSI-H4A 85.9 Macquarie 29,600 28 Jun 2018
HSI-C3B 81.6 Macquarie 31,200 30 Jul 2018
HENGYUAN-CH 45.1 CIMB 8.00 29 Jun 2018
SUPERMX-C37 42.2 RHB 2.65 17 Aug 2018

 

New Warrants

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To view the full list of structured warrants available on Bursa Malaysia, kindly visit malaysiawarrants.com.my.

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.

 

 

 

 

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