Warrants Commentary (9 Jul to 13 Jul)
Although trade tensions between the US and China continued to intensify, the S&P 500 was green for most of last week, with the S&P 500 futures rising 1.3% week-on-week (w-o-w) to 2,800.0 (at the time of writing) on the back of strong earnings outlook for major American corporations and banks, which are expected to report their second-quarter earnings on Friday (US time). Last Tuesday (10 Jul), the Trump administration again threatened to impose a 10% tariff on a range of Chinese goods worth USD200bil, following which Beijing has vowed to retaliate.
The warrants market saw its total turnover hitting the RM1.0bil. mark, 23.0% higher than the previous week’s turnover. Hang Seng Index (HSI) warrants again dominated, comprising 78.6% of turnover. The HSI futures rose 1.8% on Monday before falling 1.5% over the next two days, then rose 1.0% over Thursday and Friday to end the week at 28,558.0, up 1.2% w-o-w.
With the HSI see-sawing, investors were eager to trade HSI warrants, which tracked the underlying closely. As the futures rose on Monday, investors were seen taking profit on HSI call warrants and collecting HSI put warrants, namely HSI-H4B and HSI-H4I, as the warrant bid prices fell with the futures’ rise. When the futures fell mid-week, investors instead took profit on the HSI puts and took up positions in the HSI calls, namely HSI-C3F, HSI-C3I and HSI-C3K. The reverse happened again on Thursday as the futures rebounded, while on Friday bullish investors continued collecting calls, resulting in most of the warrants named above topping the most-active list. Put warrant HSI-H4I came up top with 292.2mil. units traded and call warrant HSI-C3I came in second with 278.8mil. units traded.
For single stocks, Top Glove warrants were actively traded, with TOPGLOV-C31 emerging the most active last week with 151.6mil. units traded. The share price rose 8.4% to RM9.90 on Tuesday (10 Jul), causing TOPGLOV-C31 to be the most active single stock warrant for that day with 58.9mil. units traded. As the US-China trade spat continued, investors appear positive that Malaysian rubber glove manufacturers could benefit from a growth in market share, as a tariff is being imposed on rubber and plastic gloves from China.
The second most popular single stock warrant by volume was the call warrant over Telekom Malaysia, TM-C25, which saw 88.1mil. units traded during the week as the share price performed positively, up 6.5% w-o-w.
Top 5 warrants by traded volume:
|Issuer||Exercise level||Expiry date|
|HSI-H4I||292.2||Macquarie||27,800||30 Oct 2018|
|HSI-C3I||278.8||Macquarie||30,000||29 Nov 2018|
|HSI-C3N||214.1||Macquarie||32,200||30 Jan 2019|
|HSI-H4B||208.8||Macquarie||28,800||30 Jul 2018|
|HSI-C4O||199.2||Macquarie||25,400||30 Jan 2019|
To view the full list of structured warrants available on Bursa Malaysia, kindly visit malaysiawarrants.com.my.