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Popularity on the rise for warrants over A50 ETF

Warrants Commentary (3 to 7 Dec)

Trading activity in warrants over the iShares FTSE China A50 Index ETF (A50 ETF) continued to rise last week, representing 21.3% of total warrants turnover, an increase from 15.6% in the previous week. The A50 ETF saw a volatile week, rising a total 4.1% over two days to close at HKD12.56 on Tuesday, as news broke on the US-China 90 day trade war truce. It thereafter fell a total 4.0% over the rest of the week amidst doubts on whether the trade differences can be resolved in time, ending the week at HKD12.06, unchanged week-on-week (w-o-w).

The most popular warrant over the A50 ETF was call warrant A50CHIN-C32, which saw 86.8mil units traded. The warrant tracked the underlying A50 ETF closely, rising 24.6% over the first two days of the week to RM0.430, and declining 22.1% over the rest of last week to finish at RM0.335. On the other hand, the most popular put warrant over the A50 ETF was A50CHIN-H27, which saw 54.5mil units traded. Put warrants move in an opposite direction to the underlying, increasing in value as the underlying declines.

In the meantime, the warrants market was once again dominated by the warrants over the Hang Seng Index (HSI), which comprised a still-hefty 63.7% of total warrants turnover. The HSI saw the same rise and fall as the A50 ETF last week, but closed down a steeper 1.7% w-o-w. With increased volatility, both the call and put warrants over the HSI were actively traded, though put warrant HSI-H4W topped the charts at 159.7mil units traded and call warrant HSI-C3W came in second with 143.8mil units traded. Investors net sold 16.7mil units of HSI-H4W, and snapped up 25.0mil units of HSI-C3W over last week, resulting in the issuer’s inventory of the call warrant HSI-C3W being completely sold out.

On the local front, the call warrant over Genting Malaysia (GENM), GENM-C42, emerged as the top traded warrant over a Malaysian counter last week. This warrant saw 27.1mil units traded, as GENM’s share price is still reeling after taking a blow from the cancellation of their planned Century Fox World theme park. The share price rose a slight 0.3% w-o-w to close at RM2.87 on Friday.

Top 5 warrants by volume traded:

Warrant name Volume
Issuer Exercise level Expiry date
HSI-H4W 159.7 Macquarie 24,200 28 Mar 19
HSI-C3W 143.8 Macquarie 28,200 28 Mar 19
HSI-C3X 128.1 Macquarie 26,800 28 Mar 19
HSI-H4O 103.5 Macquarie 25,400 30 Jan 19
A50CHIN-C32 86.8 Macquarie 12.50 28 Jun 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.