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HSI warrants in the spotlight

Warrants Commentary (29 Apr to 3 May 2019)

Last week, total warrants turnover for the 4-day trading week recorded at RM349mil., mainly consisted of warrants over the Hang Seng Index (HSI), representing 71.4% of turnover. The HSI futures kicked off the week on a strong bullish momentum, soaring 1.0% to 29,679 points on Monday before falling 0.7% to 29,468 points ahead of the Labor Day holiday. However, the index rebounded following the public holiday, registering a total gain of  1.3% over two days. The HSI closed up last Friday on hopes of policy support after latest data showed Hong Kong’s first quarter economy grew 0.5% from last year (Business Standard, 3 May).

The HSI call warrant HSI-C5D emerged as the most popular warrant as investors traded 179.0mil. units of this warrant throughout the week. Investors were seen riding the upward momentum of the index, selling back 20.6mil. of this warrant in total throughout the week. Since a call warrant moves in the same direction as its underlying, HSI-C5D’s bid price gained 17.3% week-on-week (w-o-w) as the HSI futures rose 1.4% w-o-w.

A50CHIN-C38, a call warrant over the iShares FTSE A50 China Index ETF (A50CHIN), also garnered good demand among investors with total turnover recording at RM9.6mil. A50CHIN-C38 rose 9.8% w-o-w as its mother share gained 1.9% w-o-w. This warrant has the longest tenure among all warrants over A50CHIN, expiring on 30 September 2019. Generally, longer dated warrants experience slower time decay than shorter dated warrants, making them less risky than shorter dated warrants.

Meanwhile in Malaysia, the shares of My E.G. Services (MYEG) were bearish for the week; it’s share price closed unchanged at RM1.42 last Friday. MYEG-C68, which fell 31.0% w-o-w, prompted bargain hunters to accumulate 4.1mil. units out of the 51.3mil. units traded.

Warrant investors should take note that due to the new T+2 settlement cycle imposed by Bursa Malaysia effective last Monday (29 April), the last trading date for all structured warrants listed on the exchange has now changed to two (2) market days before the warrant’s expiry date. Accordingly, the suspension of the warrant has now changed to one (1) market day before the expiry date. For the avoidance of doubt, all the expiry dates of warrant remain unchanged.

Top warrants by value traded:

Warrant nameValue
(MYR ’mil)
IssuerExercise levelExpiry date
HSI-C5G92.0Macquarie29,40027 Jun 2019
HSI-C5D54.6Macquarie30,00030 May 2019
HSI-H6R19.8Macquarie27,60027 Sep 2019
HSI-H6W14.0CIMB28,20031 Oct 2019
HSI-C6G11.3Macquarie28,80030 May 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.