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Sapura Energy and HSI warrants top the charts

Warrants Commentary (16 Apr to 20 Apr)

Warrants trading activity in Malaysia continued to improve each week on the back of increased market volatility due to the upcoming 14th general election, along with foreign factors such as recent trade and geopolitical tensions. The local benchmark index FBM KLCI rallied 0.8% to hit its all-time high at 1,895.2 points last Thursday, and thereafter fell slightly to 1,887.8 points on Friday. The index has surged more than 16% year-to-date.

Last week, total warrants turnover recorded at RM479.2mil with 2.6bil units traded throughout the week. Hang Seng Index (HSI) warrants were the biggest contributor with RM276.7mil traded, more than 50% of turnover. Investors were seen actively trading most HSI warrants, with call warrant HSI-C3B (Jul expiry) coming in as one of the top traded warrants last week. Investors traded 228.1mil units of this warrant and were net buyers, taking home 3.0mil units as the warrant price plunged 20.3% week-on-week (w-o-w). Call warrant HSI-C3C also garnered good demand from investors as they bought all 19.0mil units of the warrant’s inventory, resulting in the warrant being sold out. Warrant investors should be cautious when trading a sold-out warrant as its bid price may be inflated by other investors. The HSI fell 1.3% w-o-w to finish at 30,418.3 points last Friday.

Oil and gas services provider Sapura Energy started the week well, gaining 4.0% in total on Monday and Tuesday, before tumbling 5.2% to close at RM0.730 on Wednesday. The share price rebounded on Thursday, soaring 8.2% to RM0.790 as brent crude oil prices rose 1.7% to USD74.7/barrel, the highest since November 2014. Although the share price fell 4.4% to RM0.750 last Friday, the share price was up 2.0% w-o-w.

The call warrant over Sapura Energy, SAPNRG-C64, remained investors’ favorite with a total of 233.6mil units traded last week. Investors sold back 13.1mil units of the warrant, which fell 6.3% to RM0.075 last Friday. Meanwhile, investors were seen switching to SAPNRG-C58, taking home 5.8mil units out of 116.1mil units traded. SAPNRG-C58 is a shorter dated warrant (Aug expiry) while SAPNRG-C64 has longer time to maturity (Oct expiry). Longer dated warrants tend to have lower gearing levels than shorter dated warrants, and experience slower time decay. Hence (all other factors held constant), they tend to be of lower risk than warrants with lesser time to expiry.

Top 5 warrants by trading volume:

Warrant name Value

(’mil)

Issuer Exercise price (RM) / Exercise level Expiry date
SAPNRG-C64 228.1 Macquarie 0.500 31 Oct 18
HSI-C3B 145.4 Macquarie 31,200 30 Jul 18
HSI-H2Z 119.9 Macquarie 28,200 28 Jun 18
HSI-H4A 115.2 Macquarie 29,600 28 Jun 18
SAPNRG-C58 114.1 Macquarie 0.880 30 Aug 18

 

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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