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HSI warrants still investors’ top pick in sluggish markets

Warrants Commentary (2 Jul to 6 Jul)

Despite the shorter trading week for the Hang Seng Index (HSI) due to closure of the Hong Kong market on Monday (2 Jul) for a public holiday, the warrants market still managed to cinch a respectable turnover of RM813.3mil., 9.7% of the broader market within Bursa Malaysia. The HSI warrants turnover made up 81.8% of total warrants turnover at RM665.5mil. traded.

As the deadline for the first round of tariffs imposed by the US on Chinese goods drew near, the HSI continued its bearish momentum from June into July on the back of heavy selling in pharmaceuticals and declines in mainland China shares. The HSI fell 1.4% to 28,545.6 points on Tuesday and declined another 1.1% on Wednesday, before falling a slight 0.2% on Thursday. On Friday, the day on which the US is scheduled to start charging a 25% import tax on more than 800 Chinese products, the HSI rebounded 0.5% to 28,315.6 points, but it was not enough to recover its earlier losses, ending the week 2.2% lower week-on-week (w-o-w).

As the HSI dipped on Tuesday and Wednesday, investors took profit on the HSI put warrants and took up new positions in the call warrants. On Thursday and Friday, when the HSI futures rose 0.6% to 28,220.0 over these two days, investors did the opposite – taking profit on HSI calls and buying HSI puts. This led to both the HSI calls and puts to be actively traded, with put warrant HSI-H4I coming in as the top traded warrant at RM144.2mil. traded. The put warrant’s price rose 11.1% w-o-w, moving in an opposite direction to the underlying. Call warrant HSI-C3I was the top traded HSI call warrant, with RM97.6mil. traded.

The top traded single stock warrant for the week was SUPERMX-C45, coming in at RM8.7mil. traded. The share price surged a whopping 7.7% on Monday to RM4.49, and ended the week at RM4.48, up 7.4% w-o-w. The warrant bid price ended the week at RM0.400, up 14.3% w-o-w.

Warrants over Telekom Malaysia saw active trading during the week as well. The call warrant over Telekom, TM-C25, saw RM7.8mil. or 87.1mil. units traded. This warrant was just listed last Wednesday (4 Jul), and have since averaged a turnover of RM2.6mil. per day. Investors took home 25.2mil. units of this warrant during the 3-day period.

Top 5 warrants by traded value:

Warrant name Value

(RM’mil.)

Issuer Exercise level Expiry date
HSI-H4I 144.2 Macquarie 27,800 30 Oct 2018
HSI-H4B 128.0 Macquarie 28,800 30 Jul 2018
HSI-C3I 97.6 Macquarie 30,000 27 Sep 2018
HSI-H4O 68.8 Macquarie 25,400 30 Jan 2019
HSI-C3H 50.7 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.

An article by Macquarie Captial Securities Malaysia

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