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HSI-C5D grabs limelight in volatile Hong Kong market

Warrants Commentary (18 Mar to 22 Mar 2019)

Total warrants turnover for the week ended 22 March 2019 recorded at RM455.5mil, largely due to
warrants over the Hang Seng Index (HSI), which made up 69.6% of turnover. Warrants over the iShares
China A50 ETF Index have also been gaining traction in recent weeks, with its total value traded coming
in at approximately 11% of total turnover.

Last week, the HSI futures kicked off the week on a bullish note, jumping a total 1.5% over two days, but
later fell 0.6% on Wednesday, following the conclusion of the Federal Reserve (Fed) meeting. The
futures extended its decline, falling another 0.8% over the next two days as investors continued to
process the impact of the Fed’s more dovish stance (CNBC, 22 Mar). At the conclusion of its second
monetary policy meeting held last week, the Fed signalled no interest rate hikes in 2019, and voted to
keep the benchmark federal funds rate steady. On Friday, the HSI futures ended the week at 29,084
points, up a slight 0.1% week-on-week (w-o-w).

The HSI’s sluggish performance in the last three days of the week attracted warrant investors to actively
trade the HSI calls, most notably HSI-C5D, as its trading volume recording the highest among all
warrants for the week at 261.7mil. units. Throughout the week, bargain hunters took home a total
18.8M units of the call warrant, which fell 10.7% w-o-w.

Meanwhile in Malaysia, FGV Holdings’ (FGV) share price jumped 9% to RM1.23 on Wednesday, garnering good demand from warrant investors as they accumulated 5.6M units of the new call warrant FGV-C73 out of the 24.4M units traded on Wednesday. The bid price of FGV-C73 surged 21.4% w-o-w as its mother share rose 7.2% w-o-w. FGV-C73 has one of the longest tenures among FGV warrants listed on Bursa Malaysia, with its expiry date on 30 September 2019.  Warrants with a longer time to expiry generally experience slower time decay than warrants with a shorter time to expiry, which can be translated to a lower level of gearing and risk (all other factors held constant).

Elsewhere, MYEG-C55 also continued to be popular, with investors trading RM5.1mil. throughout last week. MYEG-C55 rose 19.1% as its underlying’s share price rallied 7.8% w-o-w.

Top stock warrants by value traded:

Warrant nameValue
(MYR ’mil)
IssuerExercise price (MYR)Expiry date
FGV-C735.2Macquarie1.3830 Sep 2019
MYEG-C555.1Macquarie1.2028 Jun 2019
VS-C103.0Macquarie1.2031 Jul 2019
FGV-C632.9Macquarie0.9528 Jun 2019
HIBISCS-CR2.5Kenanga1.082 Aug 2019

If you have any questions or need further assistance, please do not hesitate to email us at info@malaysiawarrants.com.my.

To view the full list of structured warrants available on Bursa Malaysia, kindly visit malaysiawarrants.com.my.

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.