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HSI-H8K stole the limelight with 197.0% gain w-o-w

Warrants Commentary (28 to 31 January)

The Malaysia warrants market caught fire last week with an RM318.5mil turnover despite the short trading week due to the Chinese New Year holidays in Malaysia (Monday) and Hong Kong (Monday and Tuesday). We saw a surge in warrants interest among investors amid worries over the Wuhan coronavirus outbreak at a global scale. Out of all warrants listed on Bursa Malaysia, warrants over the Hang Seng Index (HSI) were the most popular with RM200.7mil traded, making up 63.0% of the total warrants turnover.

The HSI futures suffered its worst weekly performance since July 2019. On Wednesday when the HSI futures resumed trading, it plunged 3.0% to close slightly above the 27,000 mark. The HSI futures opened in the red on Thursday and proceeded to finish 2.6% lower at 26,350 as the total coronavirus infections and death numbers continued to rise. The World Health Organization (WHO) declared the Wuhan coronavirus a global emergency (BBC, 31 Jan), causing the Hong Kong index futures to react negatively, falling another 0.4% to 26,233 points on Friday; down 5.9% week-on-week (w-o-w). 

Among the popular warrants last week, put warrant HSI-H8K topped the list with RM91.3mil traded as the put warrant recorded a whopping 197.0% return w-o-w. Put warrant HSI-H8T and HSI-H8W were also actively traded last week with RM44.8mil and RM19.2 turnover respectively, as the HSI futures were trading lower throughout the week; the put warrants moved in an opposite direction to the underlying, in this case the HSI futures, causing the put warrants to rise in value. However, bargain hunters took the opportunity to accumulate call warrant HSI-C7Q at a lower price last week, taking home a total 26.5mil units, which resulted in this call warrant being fully sold out.

Warrants over the iShares China A50 Index ETF (China A50 ETF, 2823 HK) also saw a surge in trading interest last week. The China A50 ETF plummeted more than 7.6% w-o-w as China authorities decided to extend the Chinese New Year break by 3 days due to the coronavirus (Bloomberg, 27 Jan). The most notable China A50 ETF warrant was put warrant A50CHIN-H37, which saw RM12.9mil traded. Bearish investors net bought 2.9mil units of this warrant last week as its bid price jumped 138.5% w-o-w.

Top warrants by value traded:

Warrant name Value
Issuer Exercise level/price Expiry date
HSI-H8K 91.3 Macquarie 27,000 27 Feb 2020
HSI-H8T 44.8 Macquarie 27,600 30 Mar 2020
HSI-H8W 19.2 Macquarie 25,400 30 Mar 2020
HSI-C7Q 17.4 Macquarie 28,400 30 Mar 2020
A50CHIN-H37 12.9 Macquarie 14.00 29 Apr 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.