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HSI puts actively traded in volatile market

Warrants Commentary (5 Nov to 9 Nov)

The Hang Seng Index (HSI) began last week on a bearish note, making a sharp U-turn from the surge in the week prior as the index tumbled 2.1% to 25,934.4 points last Monday. However, the HSI rebounded the following day, closing 0.7% higher as investors kept an eye on the US midterm election. After the election, the HSI rallied for the next two days, surging 0.4% in total to finish above the 26,000 level, before plunging 2.4% to 25,601.9 points on Friday.

HSI warrants continued to be actively traded, with total turnover coming in at RM237.7mil, approximately 74.0% of overall warrants turnover of RM323.3mil. As the HSI remained volatile, investors were seen trading a good mixture of both the HSI calls and puts. The HSI put, HSI-H4O, emerged as the most popular warrant, with a total of 148.8mil units changing hands. At the end of the week, investors net sold 21.2mil units of the put warrant, which gained a whopping 36.8% week-on-week.

On the other hand, the HSI call, HSI-C3V, saw investors buying 28.8mil units out of 118.0mil units traded throughout the week. Due to huge demand from investors, HSI-C3V was sold out as investors bought 12.1mil units last Friday. Investors should note that the market maker can no longer provide an offer price for the sold out warrant. In some circumstances, the warrant’s bid price may be inflated as other investors may be bidding higher than the market maker’s bid price.

Elsewhere, in Malaysia, Genting Malaysia (GENM) stole the limelight last week as the share price was hammered down after the government revised the gaming license fees and casino duties in the recent Budget 2019. GENM’s share price plunged 20.5% to RM3.61 last Monday. It recovered 0.8% on Wednesday before losing 1.7% the rest of the week. New call warrant GENM-C42 made its debut last Wednesday, and saw 28.0mil units traded over three days. GENM-C42 has an exercise price of RM4.60, the lowest among all call warrants over GENM. Generally, call warrants with a lower exercise price have a lower gearing level compared to those with a higher exercise price. Therefore (all other factors held constant), call warrants with a lower exercise price can be associated with a lower level of risk.

Top 5 warrants by value traded:

Warrant name Value
Issuer Exercise level Expiry date
HSI-H4O 87.8 Macquarie 25,400 30 Jan 19
HSI-C3X 56.0 Macquarie 26,800 28 Mar 19
HSI-H4V 22.8 Macquarie 22,800 28 Mar 19
HSI-C3V 19.5 Macquarie 29,600 28 Mar 19
HSI-C3W 16.7 Macquarie 28,200 28 Mar 19

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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.