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Index warrants dominate the warrants market

Index warrants continue to dominate the Malaysian warrants market, with the top ten warrants by turnover last week consisting of five warrants over the Hang Seng Index (HSI) (3 call warrants and 2 put warrants), three warrants over the S&P 500® Index (SP500) (2 put warrants and 1 call warrant) and 2 warrants over the local benchmark FBM KLCI (both put warrants). Total turnover came in at RM442.2mil, 8.5% higher than the previous week. Approximately 91.6% of last week’s turnover were in index warrants.

The put warrant HSI-H8M once again dominated the top traded list with a turnover of RM215.9mil. Bearish investors net bought 16.3mil units of this put warrant over last week, out of the 356.9mil units traded. The HSI futures see-sawed throughout the week as the Covid-19 pandemic continued to rock markets all over the world – the futures fell 2.1% on Monday, rose 2.2% on Tuesday, plunged 3.3% on Wednesday, then recovered 1.5% on Thursday before falling a slight 0.3% on Friday to finish the week at 23,196, 1.3% lower week-on-week (w-o-w). With the HSI’s plunge in the month of March, put warrant HSI-H8M was the top performing index warrant, rising 500% month-on-month. 

Meanwhile, the second most popular warrant was once again call warrant HSI-C9J, as bullish investors net bought 7.9mil units out of the 257mil units traded. On Wednesday, as the HSI futures fell 3.3%, investors collected 20.7mil units, resulting in this warrant being sold out. Investors should exercise caution when trading sold out warrants as the warrant’s price may be inflated by other investors queuing in the market; they may not be bidding at such high prices when you are looking to exit your position.

Meanwhile, warrants over the local benchmark FBM KLCI came in second after warrants over the HSI, as put warrants FBMKLCI-H8R, FBMKLCI-HAF and FBMKLCI-H8S were popular with investors who are bearish on the Malaysian market. Coming in third are warrants over the SP500, as the SP500 Index saw a rocky week, falling 2.1% w-o-w to finish the week at 2,488.65 points despite the 2.3% rally on Thursday, as the U.S. government moved to implement more stringent measures to contain the Covid-19 pandemic following the sharp rise in infection and death count in the U.S. Popular warrants over the SP500 include put warrants SP500-HK and SP500-HL, and call warrant SP500-CK. 

Top warrants by value traded:

Warrant name Value
Issuer Exercise level Expiry date
HSI-H8M 215.9 Macquarie 23,000.0 28 Apr 2020
HSI-C9J 37.3 Macquarie 27,400.0 29 Jun 2020
HSI-C9S 37.2 Macquarie 27,600.0 28 Aug 2020
FBMKLCI-H8R 18.2 Maybank 1,508.0 30 Oct 2020
SP500-HK 12.7 Macquarie 2,400.0 21 Sep 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.