Warrants Commentary (18 to 22 February 2019)
Warrants over FGV Holdings (FGV) were the most popular warrants over Malaysian shares, with more than RM29.3mil. traded for the week. The share price almost enjoyed a perfectly green week, with 4 consecutive days of gains before ending Friday 3.1% lower to RM1.25. Week-on-week (w-o-w), FGV’s share price was up 10.6%.
Among the many warrants over FGV, FGV-C63 was the most popular warrant with more than RM16.2mil. traded for the week. The warrant tracked the underlying closely, gaining as much as 21.0% on Wednesday to close at RM0.230, and ended the week 38.2% higher w-o-w at RM0.235. FGV-C63 has a deep in-the-money (ITM) exercise price of RM0.950, which has made this warrant more expensive to trade, and has a lower gearing level. The issuer of this warrant has widened the offer price to prevent further buying of this warrant. Existing holders of this warrant will not be disadvantaged as the bid price of the warrant will continue tracking the underlying’s share price. With the offer price widened, investors were seen shifting their focus to FGV-C61, which has a higher exercise price of RM1.35.
VS Industry (VSI) was also another popular underlying, with VS-C9 and VS-C10 leading the way. The share price of VSI briefly breached the RM1.00 resistance level on Wednesday after an impressive 7.5% increase. However, on Friday the share price failed to remain above this level and closed at RM0.985, a w-o-w increase of 6.5%. Between both warrants, VS-C10 is cheaper in absolute price due to its higher exercise price of RM1.20, compared to VS-C9’s ITM exercise price of RM0.880. These two warrants are expiring around the same time, on 2 Aug 2019 and 31 July 2019 respectively.
Meanwhile, warrants over the Hang Seng Index (HSI) continued to make up the bulk of turnover. Other than a 0.6% dip last Tuesday, the HSI futures remained positive throughout the week with a w-o-w gain of 3.4%. With the HSI on an upward momentum, investors were seen actively trading puts HSI-H4Y and HSI-H4X, with both warrants moving in and out of the sold-out list. Call warrant HSI-C3W was the most active HSI warrant, enjoying a whopping w-o-w gain of 64.4% to close at RM0.485.
Top warrants by value traded:
|Issuer||Exercise level / Exercise price (HKD)||Expiry date|
|HSI-C3W||133.1||Macquarie||28,200||28 Mar 19|
|HSI-C5D||54.9||Macquarie||30,000||30 May 19|
|HSI-H6F||46.9||Macquarie||26,600||30 May 19|
|HSI-H4Y||42.6||Macquarie||27,000||28 Mar 19|
|A50CHIN-C34||41.2||RHB||10.80||30 Aug 19|
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