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Trading in HSI warrants surge as HSI suffers biggest decline in months

Warrants Commentary (11 to 15 November)

The turnover for Malaysia warrants market for the week ended 15 November 2019 surged 17.5% to RM341.8mil week-on-week (w-o-w). There was an increased trading activity in the Hang Seng Index (HSI) warrants, as the turnover increased by 36.2% to RM287.4mil from the previous week.

Last Monday (11 Nov), the HSI had its worst day in more than three months, tumbling by more than 700 points or 2.6% to finish  below  the 27,000  level at 26,926.6. Although the index rebounded 0.5% on Tuesday, it plunged a total 2.8% for the next two days, before eking out small gains  to close at 26,326.7 on Friday.

Monday’s decline came on the heels of new shocking levels of violence in the Asian financial hub where a traffic officer shot a 21-year-old protesters and fired two more live rounds early in the day. In another part of the city, a man was set alight following a heated argument with a group of protesters (CNN Business, 11 Nov). Throughout the week, the protesters continued wreaking havoc as they took over universities and financial districts. Hong Kong banks circulated safety memos telling their staff to cancel meetings and encouraging employees to work remotely if possible (Business Time, 13 Nov).

Last week, while investors’ sentiments were mixed, the HSI put warrant, HSI-H8F became the top traded warrant with RM131.4mil turnover. As the HSI put warrant moves in an opposite direction from the underlying index, HSI-H8F’s bid price jumped 88.6% week-on-week (w-o-w), closing at RM0.415 last Friday. Investors were seen taking profit as they net sold up to 14.0mil units. Meanwhile bargain hunters took the chance of the bearish momentum in the HSI to buy more than 13.0mil units of the HSI call warrant, HSI-C7K. The call warrant skidded 41.7% w-o-w as it closed at bid price of RM0.335.

On the local front, the call warrant over MY E.G. Services (MYEG), MYEG-C82 remained as investors’ favourite for three weeks in a row. Investors took home 11.0mil units of MYEG-C82, out of the total 29.9mil units traded last week. MYEG-C82 fell 11.1% w-o-w as its mother share also dropped by 1.7% based on last Friday’s closing price at RM1.16.

Top warrants by value traded:

Warrant name Value
Issuer Exercise level / price Expiry date
HSI-H8F 131.4 Macquarie 26,400 30 Dec 2019
HSI-C7K 56.7 Macquarie 28,000 27 Feb 2020
HSI-C7F 21.2 Macquarie 27,400 30 Dec 2019
HSI-H8C 15.0 Macquarie 27,400 28 Nov 2019
HSI-C7J 14.8 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.