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Large moves in net positions for HSI warrants

The first week of March recorded a warrants turnover of RM342.9mil, an 18.0% decline from the previous week. Despite the overall decline in the week’s trading activity within the local Bourse by 27.1%, trading activity in warrants remained robust as investors actively traded the warrants over the Hang Seng Index (HSI), which comprised 59.9% of the market, as well as focussed on warrants over the FBM KLCI and S&P 500® Index (SP500), which saw a 14.3% and 175.9% week-on-week (w-o-w) increase in turnover, respectively.

The HSI started the first three days of the week on a rather flat note, with bullish investors accumulating 33mil units of call warrant HSI-C7Z, resulting in this warrant being sold out. On Thursday, the HSI March 2020 futures contract (over which Macquarie’s HSI warrants track) surged 2.1% to finish at 26,704 points, tracking overnight gains on Wall Street, causing investors to take profit on 29.4mil units of HSI-C7Z and 27.0mil units of HSI-C7V, which rose 31.6% and 48.1%, respectively. These warrants were no longer sold out, meaning the issuer once again had the inventory to sell to investors. On the other hand, bullish investors collected 25.5mil units of put warrant HSI-H8W as it fell 35.7%.

The respite for the Hong Kong market did not last long, as the futures then tumbled 2.6% to end the week at 26,010 points, 0.6% lower w-o-w. The index joined a sea of red on Friday due to increased uncertainties over the impact of Covid-19’s rapid spread outside of China. Investors took profit on 28.6mil units of HSI-H8W as it rose 51.9%, while collecting 30.8mil units and 29.1mil units of call warrants HSI-C7Z and HSI-C7V as their prices fell, resulting in these warrants being completely sold out, again joining call warrant, HSI-C7Q which was sold out the whole of last week.

Meanwhile, warrants over the SP500 were increasingly popular (5.8% of the market) as investors look to gain exposure to the U.S. market. Put warrant SP500-HJ ended up in the top warrants list with RM18.5mil traded as the SP500 Index closed at 2,972.37, 0.6% higher w-o-w.

On the local front, investors focussed on glove counters Supermax and Top Glove as demand for gloves is expected to continue with the Covid-19 spread. Top warrants over Malaysian shares by turnover include SUPERMX-C78, SUPERMX-C87 and TOPGLOV-C65. 

Top warrants by value traded:

Warrant name Value
(mil.)
Issuer Exercise level Expiry date
HSI-C7Z 55.9 Macquarie 28,000 28 Apr 2020
HSI-H8W 50.3 Macquarie 25,400 30 Mar 2020
HSI-C7V 24.1 Macquarie 27,400 30 Mar 2020
SP500-HJ 18.5 Macquarie 3,000 21 Sep 2020
HSI-HAA 11.0 Macquarie 26,400 28 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.