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HSI trumps again in uncertain markets

Warrants Commentary (21 May to 25 May)

Markets were rife with uncertainty as investors were wary of risks piling up across the globe. The optimism brought upon by a temporary truce in the trade war between the U.S. and China was overshadowed by U.S. President Donald Trump expressing pessimism on whether the summit with North Korea’s leader Kim Jong Un, scheduled on 12 June 2018 in Singapore, would take place. Trump ultimately cancelled the summit toward the end of the week, but later said that the summit could still happen (as at the time of writing).

The FBM KLCI fell for four consecutive days last week as the market was in a selling frenzy, fuelled further by weak local corporate earnings announcements and news on Malaysia’s RM1tril in debt. Although the local benchmark index climbed 1.2% on Friday to end the week at 1,797.40 points, it was not enough to recover its losses from earlier in the week, ending the week down 3.1% week-on-week (w-o-w).

On the other hand, the Hong Kong Hang Seng Index (HSI) experienced large swings last week, ending the week down 1.5% w-o-w to 30,588.04 points. Demand for HSI call and put warrants was high last week, constituting 61.2% of the RM489.4mil total warrants turnover, as increased volatility attracted investors. Call warrant HSI-C3B was the top traded warrant for the week, coming in at RM81.4mil traded. Bargain hunters collected 9.7mil units of this warrant as the warrant bid price fell 15.6% w-o-w to RM0.405, in anticipation of a potential rebound in the HSI.

Although the top traded warrants were mostly dominated by index warrants, the call warrant over Hibiscus Petroleum, HIBISCS-CG, managed to snag a spot in the top 10 with RM12.7mil traded. The share price started the week up 5.8% to RM1.01 on Monday, but lost most of its gains the rest of the week, ending the week 0.5% lower w-o-w to RM0.950. HIBISCS-CG’s bid price correspondingly fell 3.8% w-o-w to RM0.125, as investors took home 17.5mil units of this warrant out of the 101.5mil units traded.

A side note that UMW Oil & Gas Corp has changed its name to Velesto Energy with effect from 25 May 2018; its stock short name has changed from UMWOG to VELESTO, and all warrants issued over this counter have been renamed accordingly.

 

Top 5 warrants by traded value:

 

Warrant name Value

(RM’mil)

Issuer Exercise level Expiry date
HSI-C3B 81.4 Macquarie HKD31,200 30 Jul 18
HSI-C3E 46.0 Macquarie HKD31,800 30 Aug 18
HSI-H4A 34.4 Macquarie HKD29,600 28 Jun 2018
HSI-H4B 34.0 Macquarie HKD28,800 30 Jul 2018
HSI-C3A 29.1 Macquarie HKD32,600 30 Jul 2018

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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