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HSI declined further as protests intensified

Warrants Commentary (30 September to 4 October)

It was a rocky week for the Hong Kong Hang Seng Index (HSI) last week, with the index rising 0.5% to 26,092.3 points on Monday. The Hong Kong market was shut on Tuesday in conjunction with the National Day holiday; tensions ran high as the protests in Hong Kong continued. Monday’s rise did not sustain through the week, as the HSI fell 0.2% upon reopening on Wednesday; protests escalated further when an 18-year-old protester was injured with a shot to the chest as he swung a metal rod at a riot policeman (South China Morning Post, 2 Oct).

Following that, last Thursday, Hong Kong was looking to ban face masks at public gatherings in a bid to stop protesters from hiding their identities from police officers, though the HSI recovered 0.3% on that day. During a press conference held at 3pm on Friday, chief executive Carrie Lam announced that the ban could come into effect at midnight on Friday (South China Morning Post, 4 Oct). Following the announcement, protests started mushrooming across the city, intensifying further as night fell – by 10:30pm on Friday, protesters had forced the closure of the entire MTR railway network. The index plunged 1.1% on Friday to end the week at 25,821.0 points, down 0.5% week-on-week (w-o-w).

Last week’s trading was concentrated quite heavily in 3 warrants, which are put warrants HSI-H6S and HSI-H8B, and call warrant HSI-C7F, all amassing over RM50mil. traded each. Top warrant HSI-H6S, which had RM61.3mil. traded, saw a remarkable 20.1mil. units net sold by investors on Friday alone as the warrant price rose 29.0%, moving in an opposite direction to the HSI October futures’ decline of 1.4% to 25,787.0 points. Bullish investors switched to call warrant HSI-C7F, buying 18.4mil. units on Friday as they anticipate a correction in the index, resulting in this warrant being sold out, meaning the issuer no longer has any inventory left to sell. Investors should take note that the price of sold out warrants may be inflated by other investors queuing in the market – to find out the fair bid price of this warrant, do refer to its live matrix on Macquarie’s website.

Meanwhile, warrants over Malaysian shares that were popular last week include PENTA-CE, GTRONIC-C1, FRONTKN-CA and INARI-C48.

Top warrants by value traded:

Warrant name Value
Issuer Exercise level Expiry date
HSI-H6S 61.3 Macquarie 25,200 30 Oct 2019
HSI-H8B 57.9 Macquarie 25,600 28 Nov 2019
HSI-C7F 52.6 Macquarie 27,400 30 Dec 2019
HSI-H8E 23.4 Macquarie 24,600 30 Dec 2019
HSI-C7J 8.9 Macquarie 30,000 27 Feb 2020

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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.