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Call warrant HSI-C7F stole the limelight

Warrants Commentary (26 August to 30 August)

The Malaysian warrants market recorded a total turnover of RM558.4mil. last week, 33.0% higher compared to a week ago. This can be attributed to the eventful week, with the escalation of the U.S.-China trade war, the G7 leaders’ summit, and the continuing Hong Kong protests. Warrants over the Hang Seng Index (HSI) continued to dominate the warrants space with a turnover of RM418.5mil., making up 74.9% of total warrants turnover last week.

On 23 August, China officials decided to slap 5% to 10% tariffs on USD75bil. worth of U.S. goods as a retaliation measure (CNBC, 23 Aug). Two days later, U.S. President Donald Trump threatened to impose tariffs on all Chinese imports, and asserted that he has the right to order U.S. companies to cut ties with China based on an obscure 1977 law (CNBC, 25 Aug). The trade war drama over the weekend saw the HSI futures heavily hammered down on Monday (26 Aug), falling 1.8% to finish at 25,570.0 points. On the same day, President Trump expressed his regrets during the G7 summit of not imposing more tariffs on Chinese goods (BBC, 26 Aug). The HSI futures were rather flat on Tuesday and closed 0.1% lower on Wednesday after Trump’s comment. 

However, we saw a 0.4% rebound in the HSI futures on Thursday as the trade war fear dampened. The bullish momentum did not last as the HSI futures closed in the red on Friday, after the Hong Kong protest leaders were arrested (Bloomberg, 30 Aug) and also after the China government rejected Hong Kong’s request to withdraw the extradition bill (Reuters, 30 Aug).

Call warrant HSI-C7F topped the warrants list last week with a RM138.9mil. turnover as bullish investors took the opportunity of the plunge in the HSI futures to collect this call warrant. At the end of the week, investors took home a total of 12.4mil. units of this call warrant as the bid price declined 20.0% week-on-week (w-o-w). On the other hand, investors who were keen to gain exposure in the downside of the HSI futures traded RM50.9mil. and RM46.8mil. respectively in the put warrants HSI-C6Q and HSI-H6P last week. HSI-H6Q and HSI-H6P posted weekly gains of 21.6% and 15.1% respectively as the HSI futures declined 1.6% w-o-w.

Top HSI warrants by value traded:

Warrant nameValue
(RM’mil.)
IssuerExercise levelExpiry date
HSI-C7F138.9Macquarie27,40030 Dec 2019
HSI-H6Q50.9Macquarie26,20027 Sep 2019
HSI-H6P46.8Macquarie24,80027 Sep 2019
HIS-H6S43.5Macquarie25,20030 Oct 2019
HSI-H8E31.5Macquarie24,60030 Dec 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.