Warrants Commentary (28 May to 1 Jun)
Global markets were down following various geopolitical events, with the Trump administration saying that it would move forward with plans for tariffs on metal imports from the European Union, Canada and Mexico, at its forefront. In addition, the latest development in Southern Europe’s political outlook, namely in Italy and Spain, further contributed to uncertainty in the market.
The warrants market saw a turnover of RM455.8mil last week, with warrants over the Hang Seng Index (HSI) and the FBM KLCI taking the front seats as they formed 70.5% of total warrants turnover.
The HSI plunged 1.4% to 30,056.79 points on Wednesday, and recovered some on Thursday and Friday, but ultimately ended the week down 0.3% week-on-week (w-o-w) to 30,492.91 points. Call warrant HSI-C3E was the top traded warrant with RM72.4mil traded; investors collected 13.8mil units of this warrant on Wednesday when the warrant bid price plunged 26.7%, and took profit by selling 13.1mil units when it rose 21.2%. Put warrant HSI-H4A came in second with RM44.5mil traded; investors took profit on this warrant on Wednesday as the HSI declined, net-selling 11.1mil units as the warrant price increased a whopping 45% to RM0.305. Put warrants move in the opposite direction of the underlying, which means they will increase in value as the underlying decreases.
On the local front, the Malaysian market saw further decline following the government’s announcement on the cancellation of the third Klang Valley Mass Rapid Transit (MRT3) line and the Kuala Lumpur-Singapore high-speed rail (HSR) project. In addition, the effective removal of the goods and services tax (GST) fuelled concern on the Malaysian economy. Last Wednesday, the FBM KLCI plunged 3.2% to close at the year’s low of 1.719.28 points. The index rose the rest of the week but still closed down 2.3% w-o-w to 1,756.38 points. Put warrants over the FBM KLCI, FBMKLCI-H4P and FBMKLCI-H4M, saw some action with RM12.3mil and RM8.2mil traded, respectively.
For single stocks, the newly-listed call warrant over My EG Services (MYEG), MYEG-C40 was the top traded single-stock warrant with RM7.6mil traded. MYEG’s share price has suffered tremendously following the General Election. It closed at RM0.860 last Friday, exactly one-third of its pre-election price of RM2.58 (on 8 May).
Top 5 warrants by traded value:
|Warrant name||Value (RM’mil)||Issuer||Exercise level||Expiry date|
|HSI-C3E||72.4||Macquarie||HKD31,800||30 Aug 2018|
|HSI-H4A||44.5||Macquarie||HKD29,600||28 Jun 2018|
|HSI-H4B||38.3||Macquarie||HKD28,800||30 Jul 2018|
|HSI-C3B||37.7||Macquarie||HKD31,200||30 Jul 2018|
|HSI-H4C||15.6||Macquarie||HKD30,200||30 Jul 2018|
To view the full list of structured warrants available on Bursa Malaysia, kindly visit malaysiawarrants.com.my.