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Warrants turnover spike 40% amid volatile markets

Overall markets remained volatile last week as the world is still battling the coronavirus outbreak which has negatively impacted economies across the globe. Recently, China recorded the biggest decline in its 1Q20 gross domestic product (GDP) in decades as the country’s economy slumped by 6.8%, mainly dragged by the pandemic. The International Monetary Fund (IMF) projected that global GDP will shrink 3% this year – compared to its pre-pandemic prediction of a 3.3% expansion. The economic contraction may continue into 2021 should the coronavirus continue to linger, marking the deepest dive since the Great Depression (Bloomberg, 14 Apr).  

Last week also saw the crude oil prices drop into negative territory for the first time in history. The West Texas Intermediate (WTI) May futures that expired last Tuesday closed at -USD37 per barrel, plunging more than 100% overnight, due to oversupply which resulted in the lack of storage capacity in Oklahoma. 

Trading in warrants has become more active amid unpredictable markets, sending last week’s overall warrants turnover to spike 40.0% to RM418.0mil from the week prior, which is also partially attributed to the public holiday in Hong Kong in the previous week. While the Hang Seng Index (HSI) continued to be the major contributor to the overall turnover, trading activity in the warrants over Malaysian counters and FBM KLCI Index (KLCI) also rose, with each contributing 25.4% and 12.3%, respectively. 

The HSI slid 2.3% week-on-week (w-o-w) as the index traded below the 24,000-level from last Tuesday following the WTI price slump. A HSI call warrant, HSI-C9S (28 Aug expiry; -15.7%), was in the spotlight, becoming the top traded warrant by total trading volume with 269.7mil units traded and a total net buy of 11.1mil units. Two HSI puts i.e. HSI-H8M (28 Apr expiry; -44.4%) and HSI-HAF (28 May expiry; +6.5%) were also active, with HSI-HAF cinching the top traded warrant spot by total turnover. Investors sold back 18.2mil units of HSI-H8M which is expiring next week and bought 7.2mil units of the longer dated HSI-HAF. The last trading day for HSI-H8M along with nine other HSI warrants was on Friday (24 Apr).

Meanwhile, SUPERMX-C76 and SUPERMX-C86 were among active warrants over the Malaysian counters, while FBMKLCI-HAD was the top traded warrant over KLCI. 

Top warrants by volume traded:

Warrant name Volume
Issuer Exercise level/

Exercise price (RM)

Expiry date
HSI-C9S 269.7 Macquarie 27,600 28 Aug 2020
HSI-HAF 120.1 Macquarie 24,600 28 May 2020
HSI-C9J 115.1 Macquarie 27,400 29 Jun 2020
HSI-H8M 73.7 Macquarie 23,000 28 Apr 2020
SUPERMX-C76 64.9 RHB 1.70 22 May 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.