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Warrants market winds down for long weekend

The last week of April saw a slowdown in warrants trading activity ahead of the long weekend. The Hong Kong market was shut last Thursday for the Birthday of the Buddha i.e. no market making for warrants over the Hang Seng Index (HSI) and iShares China A50 Index ETF, while both the Malaysia and Hong Kong markets were shut last Friday for Labour Day. Average daily turnover for the week clocked in at RM57.9mil per day, a dip from the previous week’s RM83.6mil, with warrants over the HSI taking up 50.5% of total turnover for the week despite the additional day off.

On Monday, the HSI futures rallied 1.8% to close at 24,269 from strong buying activities, particularly in the morning trading session. Investors took profit in call warrants HSI-C9S and HSI-C9J, net selling 8.4mil and 4.2mil units respectively, as the warrant prices rose 12.1% and 19.4% respectively. This means that HSI-C9J is no longer sold out and has been removed from the sold-out list as the issuer now has inventory in this warrant to sell. On Tuesday, the HSI futures rose for the second day (+1.6%), causing investors to net sell further 13.1mil units of HSI-C9J and 5.1mil units of HSI-C9S. Over these two days, as the HSI rose, bearish investors accumulated put warrant HSI-HAF as the warrant bid price fell a total of 26.7%. Put warrants move in the opposite direction to the underlying, rising in value as the underlying decreases.

Meanwhile, on Wednesday, the HSI futures swung between gains and losses, ultimately closing slightly lower at 0.3% to 24,502. Bullish investors took the opportunity to accumulate the two same call warrants ahead of the long weekend. Over last week, put warrant HSI-HAF emerged the most popular warrant with 96mil units traded, while the two call warrants HSI-C9S and HSI-C9J came in second and third with 91.3mil and 86.2mil units traded, respectively. 

Meanwhile, on the local front, there was interest in warrants over the local benchmark FBM KLCI and the shares of glovemaker Supermax Corporation. Put warrant FBMKLCI-HAD drew interest as the FBM KLCI rose 2.8% week-on-week (w-o-w) on positive sentiments on the gradual resumption of Malaysia’s economic activities after more than 40 days of the Movement Control Order. Supermax shares rose 2.1% w-o-w to RM2.48, with call warrant SUPERMX-C76 seeing 24.6mil units traded.

Top warrants by volume traded:

Warrant name Volume
Issuer Exercise level/

Exercise price (RM)

Expiry date
HSI-HAF 96.0 Macquarie 24,600 28 May 2020
HSI-C9S 91.3 Macquarie 27,600 28 Aug 2020
HSI-C9J 86.2 Macquarie 27,400 29 Jun 2020
FBMKLCI-HAD 25.7 Kenanga 1,500 28 Aug 2020
SUPERMX-C76 24.6 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.