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Warrants over Sapura Energy in focus

Warrants Commentary (24 to 28 Sep)

We saw a drop in warrants turnover to RM291.3mil. last week, as investors chose to lay low ahead of the Federal Open Market Committee meeting last Wednesday (26 Sep), and due to the public holiday in Hong Kong last Tuesday (25 Sep). As expected, the Federal Reserve lifted its benchmark rate by a quarter point, increasing the fed funds rate to a range of 2% to 2.25%. The policy makers also signaled that further tightening could take place as early as December 2018. The central bankers revised their Gross Domestic Product (GDP) 2018 forecast for the US to 3.1% from their projection of 2.8% back in June (CNBC, 26 Sep).

The Hang Seng Index (HSI) futures had a rough start last week. It gapped down to 27,465.0 on Monday after Chinese officials cancelled trade talks with the US (Wall Street Journal, 22 Sep). Following the public holiday in Hong Kong on Tuesday, the futures rebounded a good 1.3% to 27,832.0 on Wednesday. The futures traded range-bound for the rest of the week, finishing at 27,877.0 last Friday, down 0.2% week-on-week (w-o-w).

Put warrant HSI-H4O emerged as the top traded warrant last week as bargain hunters took the opportunity to collect 6.3mil. units of this warrant on Wednesday as the HSI futures surged 1.3%. Investors also showed a lot of interest in call warrant HSI-C3S, which ended the week with 81.2mil. units traded. The bid price of this call warrant moved in the same direction as the HSI futures, falling 6.8% w-o-w to close at RM0.340 last Friday.

On the local front, oil and gas giant Sapura Energy (SAPE) announced that its subsidiary received a contract to undertake the provision of maintenance, construction and modification for ExxonMobil Exploration and Production Malaysia worth RM815mil. (The Edge Market, 25 Sep). SAPE’s share price responded positively  on Tuesday, gaining 2.3% to close at RM0.440. However, its share price dove into negative territory, falling 3.5% to RM0.410 on Friday after the group reported a net loss of RM126.1mil. for the second quarter. Call warrant SAPRNG-C69 topped the single stock warrants chart with 68.5mil. units traded last week. Investors took home 0.8mil. units of this call warrant as its bid price fell 7.7% w-o-w.

Top 5 warrants by traded volume:

Warrant name Volume
(’mil.)
Issuer Exercise level Expiry date
HSI-H4O 84.9 Macquarie 25,400 30 Jan 2019
HSI-C3S 81.2 Macquarie 30,400 27 Feb 2019
SAPNRG-C69 68.5 Macquarie 0.55 30 Apr 2019
HSI-C3P 54.1 Macquarie 30,200 30 Jan 2019
HIBISCS-CI 50.2 Macquarie 1.10 31 Jan 2019

 

 

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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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