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HSI-C5D dominated the warrants market

Warrants Commentary (8 Apr to 12 Apr 2019)

Last week, the warrants market in Malaysia recorded a turnover of RM535.8mil, 32.4% higher than the previous week due to the surge in trading activity for warrants over the Hang Seng Index (HSI) and the iShares A50 China Index ETF (A50 China ETF).

The HSI futures started the week on a strong note, hitting the year-to-date high of 30,295.0 points on Tuesday. However, the bullish momentum did not last long as the HSI futures then plunged on Wednesday and Thursday following escalation in trade tension between the EU and the US over disputed aviation subsidies (Bloomberg, 12 Apr).

Warrants over the HSI continued to take the crown in the Malaysian warrants space with RM301.2mil traded last week, making up 56.2% of the total warrants turnover. Call warrant HSI-C5D emerged as the most active warrant with RM122.5mil traded. Bargain hunters were aggressively collecting this call warrant on Wednesday and Thursday, taking home a total of 14.2mil units as the bid price fell 20.2%.

On the other hand, the A50 China ETF went on a roller coaster ride last week as it closed in the positive territory for the first 3 days of the week before falling 2.2% on Thursday, then rebounded 0.5% to close at HKD15.16 on Friday. Investors appear to be bearish on the A50 China ETF as the put warrant A50CHIN-H29 was the most popular among all warrants over the A50 China ETF; its bid price surged 15.5% on Thursday. Put warrants move in the opposite direction from the underlying index or shares, and can therefore be used as a hedging tool for investors’ portfolios.

For single stocks, warrants over FGV Holdings (FGV) stole the limelight last week as the company made headlines. FGV’s share price climbed 9.2% from Monday to Wednesday after the Malaysian government agreed to inject a total of RM6.2bil into Felda to restructure its operations and to strengthen its governance (The Star, 9 Apr). The top traded stock warrant, FGV-C73, tracked the underlying price movement closely, gaining 31.3% over the first 3 days of the week.

Top warrants by value traded:

Warrant name Value
(MYR ’mil)
Issuer Exercise level Expiry date
HSI-C5D 122.5 Macquarie 30,000 30 May 2019
HSI-H6G 35.1 Macquarie 28,000 30 May 2019
HSI-C5C 31.9 Macquarie 31,400 30 May 2019
HSI-C5J 25.8 Macquarie 28,800 30 Jul 2019
HSI-C5G 25.5 Macquarie 29,400 27 Jun 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.