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Trading in HSI warrants surged in sluggish market

Warrants Commentary (25 Jun to 29 Jun)

Asian equities markets extended their weak performances last week as the US-China trade war continued to escalate, with the Trump administration seeking further restrictions on the Chinese involvement in the US economy. This time around, US President Donald Trump plans to block firms with at least 25% Chinese ownership from buying US companies with “industrially significant technology” (Reuters, 25 June).

Additionally, on Sunday (24 June), China’s central bank announced a 50 basis points cut in the reserve ratio requirement (RRR) to 15.5 for large commercial banks. The RRR cut will take effect from Thursday (5 July), releasing CNY700bil. to accelerate the pace of debt-for-equity swaps and to free up funding for small firms.

Major Asian indices reacted negatively towards the news on Monday last week with the Shanghai Composite Index falling 1.1% to 2,859.3 points, the Nikkei Index declining 0.8% to 22,338.2 points and the Hang Seng Index (HSI) dropping 1.3% to 28,961.4 points. The HSI fell for 3 consecutive days,  dipping 1.8% to a low of 28,356.3 points on Wednesday. However, the index rebounded and surged a total 2.1% over Thursday and Friday, ending the week down 1.3% week-on-week (w-o-w).

Trading interest in HSI warrants grew a whopping 44.7% to RM632.7mil turnover last week. The HSI call warrants recorded the highest trading volume at 857.2mil. units, with the HSI-C3I being the most popular call warrant at 277.4mil. units traded as it fell 13.9% w-o-w to close at RM0.495. Meanwhile, put warrant HSI-H4B was the top traded warrant with 356.6mil. units traded. At the end of the week, investors net sold 2.1mil. units as the warrant rose 12.2% w-o-w.

The FBM KLCI tumbled for four consecutive days from Monday, falling 1.7% in total, but rebounded on Friday, soaring 1.6% to finish at 1,691.5 points. Put warrant FBMKLCI-H4P was the most active warrant over the FBM KLCI, with 66.9mil. units traded. The put warrant moved in the opposite direction to the index, closing 13.2% lower to RM0.295 on Friday.

Elsewhere, SAPNRG-C67 was the most popular single stock warrant, with its trading volume coming in at 60.3mil. units, with 766.6mil. units net bought by investors. The bid price of SAPNRG-C67 fell 5.9% w-o-w as Sapura Energy shares were down 0.8% w-o-w.

Top 5 warrants by trading volume:

Warrant name Volume

(mil.)

Issuer Exercise level Expiry date
HSI-H4B 356.6 Macquarie 28,800 30 Jul 2018
HSI-C3I 277.4 Macquarie 30,000 30 Oct 2018
HSI-H4I 240.2 Macquarie 27,800 30 Oct 2018
HSI-C3F 147.5 Macquarie 31,000 27 Sep 2018
HSI-C3H 133.5 Macquarie 31,400 30 Oct 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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