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Newsbreaks spur the Malaysia warrants market

Warrants Commentary (25 to 29 November)

Last Sunday (24 Nov), Hong Kong held its district council elections as protests paused to allow the elections to proceed peacefully. The pro-democracy party won a landslide victory. The Hang Seng Index (HSI) surged 1.5% to 26,993.0 points on Monday, prompting investors to take profit on 17.5mil units of call warrant HSI-C7J and 13.7mil units of HSI-C7F as they rose 14.3% and 24.3%, respectively. Investors who expected a downturn bought the put warrants, namely HSI-H8E and HSI-H8F. The index then fell 0.3% on Tuesday and rose 0.1% on Wednesday.

Overnight on Wednesday, US President Donald Trump signed the Hong Kong Human Rights and Democracy Act into law. US stocks rose overnight, posting fresh intraday records. The HSI did not follow, falling 0.2% on Thursday and 2.0% on Friday to 26,346.5 points, ending the week 0.9% lower week-on-week. Investors took profit on 14.6mil units of HSI-H8F as this warrant gained 40.4% on Friday. This put warrant emerged as the top traded warrant for the third week in a row, with RM66.6mil traded. Investors also net bought 21.1mil units of HSI-C7K and 18.2mil units of HSI-C7J on Friday, resulting in HSI-C7J being sold out. Currently, three HSI call warrants, HSI-C7E, HSI-C7F and HSI-C7J are sold out. Do exercise caution when trading sold out warrants as the bid price for these warrants may be inflated by other investors queuing in the market. Refer to the live matrix to see the fair bid price of a warrant.

In Malaysia, various local companies released their quarterly financial results last week, acting as a catalyst for warrants over a variety of Malaysian shares, including Ekovest, Telekom, MY E.G. Services, DRB-HICOM and others. Further, warrants over the local benchmark FBM KLCI drew interest, with put warrant FBMKLCI-H8X seeing RM4.1mil traded over the week. Warrants over the FBM KLCI allow investors to gain leveraged exposure to the Malaysian market in general.

Meanwhile, warrants over Pentamaster Corporation drew investors’ interest on Friday as the share price opened lower in the morning from news that the semiconductor company has been excluded from the Syariah-compliant list. The shares hit a low of RM3.74 before rebounding to finish at RM4.48 on Friday, down 4.5%. Call warrants PENTA-CF and PENTA-CA were popular among investors.

Top warrants by value traded:

Warrant name Value
Issuer Exercise price / level Expiry date
HSI-H8F 66.6 Macquarie 26,400 30 Dec 2019
HSI-C7K 51.5 Macquarie 28,000 27 Feb 2020
HSI-H8W 23.6 Macquarie 25,400 30 Mar 2020
HSI-C7Q 15.1 Macquarie 28,400 30 Mar 2020
PENTA-CF 16.9 Kenanga 3.88 16 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.