Warrants Commentary (4 to 8 November)
The overall Malaysia warrants turnover for last week came up to RM290.9mil, about 43% above the previous week’s turnover. Once again, warrants over the Hang Seng Index (HSI) dominated the warrants market, comprising 72.5% of turnover with RM211.0mil traded. Warrants over the iShares China A50 Index ETF (China A50 ETF) also held on to investors’ interests as they saw a total turnover of RM17.3mil, taking up 6.0% of the market.
Following the bullish week for the HSI in the previous week, the HSI continued its rally last week, rising for four consecutive days. The HSI jumped 1.6% or over 400 points on Monday as US stocks rose to fresh record highs on Friday the week prior (1 Nov) on the back of a few positive headlines, including China saying that it has reached a consensus in principle with the US during the week’s trade talks (CNBC, 1 Nov). With the increase, put warrant HSI-H8F, which moves in an opposite direction to the underlying level, fell 23.4%, resulting in investors collecting 17.7mil units of this warrant on that day.
From Tuesday to Thursday, the HSI rose a total 1.1% to 27,847.2 points, the highest level since July. However, on Friday, the index fell 0.7% to finish the week at 27,651.1 points, 2.0% higher week-on-week (w-o-w). The HSI November 2019 futures contract, which the HSI warrants currently track, closed at 27,680.0 points last Friday, also 2.0% higher w-o-w. Over these four days, call warrant HSI-C7F, which moves in line with the underlying level, had the highest turnover, resulting in this warrant taking the crown last week. In view of the recent rise in the HSI, this warrant is currently in-the-money as the underlying level of 27,680 points is higher than the exercise level of 27,400.
In the Malaysian scene, MYEG-C82, the call warrant over MY E.G. Services (MYEG), continued to be popular with investors. This warrant emerged as the top traded warrant over Malaysian shares yet again, with RM5.9mil traded. In the first three days of last week, investors net bought over 30mil units of MYEG-C82, then net sold close to 39mil on Thursday and Friday, some of them letting go of positions held from the previous week. W-o-w, MYEG’s share price rose 2.6% to RM1.18.
Top warrants by value traded:
|Issuer||Exercise level / price||Expiry date|
|HSI-C7F||107.6||Macquarie||27,400||30 Dec 2019|
|HSI-H8F||59.1||Macquarie||26,400||30 Dec 2019|
|HSI-C7E||11.4||Macquarie||29,200||30 Dec 2019|
|HSI-C7J||9.8||Macquarie||30,000||27 Feb 2020|
|A50CHIN-C50||7.8||Macquarie||15.50||31 Mar 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.