Warrants Commentary (12 May to 15 May)
Last week, trading in the Malaysian warrants space saw significant improvement, surging 53.5% week-on-week (w-o-w) to RM389.0mil although the Bursa Malaysia only opened for four days as it was shut on Monday (11 May) for the Nuzul al-Quran holiday. Interestingly, warrants over the Malaysian shares were in the spotlight as its trading value spiked 139.8% w-o-w to RM242.8mil, making it the major contributor to last week’s overall warrants turnover. Meanwhile, trading in the Hang Seng Index (HSI) warrants were less active last week, representing 26.1% of turnover, followed by the FBM KLCI (KLCI) warrants which made up approximately 6.9%.
Although the HSI kicked off the week with a strong rally to trade above the 24,000 level, it couldn’t sustain its upbeat momentum as it kept falling throughout the week, ultimately recording a loss of 1.8% w-o-w, marking the biggest decline in three weeks. The index had four days of losses last week and finished at 23,797.47 points, down 0.1% on Friday. The re-emerged tensions between the US and China contributed to the HSI’s downfall as the US is looking to tighten sanctions on Chinese telecom giant Huawei. Chairman of the US Federal Reserve Jerome Powell’s recent warning of a rocky path ahead to economic recovery also led to the HSI’s significant drop.
The HSI put warrant, HSI-HAF (+3.4% w-o-w) remained the top warrant by value traded with a turnover of RM33.7mil. This warrant is expiring very soon on 28 May 2020 and investors should note that warrants will decline in value even if the underlying price remains unchanged due to time decay, and this process is accelerated closer to expiry. HSI-C9S was also a favorite as investors net bought 25.8mil units over last week. Currently, HSI-C9S (-26.1% w-o-w) is almost sold out, with only 11% inventory remaining of its total issuance size of 43.0mil units.
On the local front, Top Glove stole the limelight as the shares gained a whopping 42.0% over four days. Other glove makers also rallied, including Supermax and Kossan Rubber with each surging 33.2% and 31.3%, respectively. Call warrants TOPGLOV-C73, KOSSAN-C6 and SUPERMX-C86 were actively traded, with their traded value recording at RM33.3mil, RM20.3mil, and RM17.8mil, respectively.
Top warrants by value traded:
|Issuer||Exercise level / price||Expiry date|
|HSI-HAF||33.7||Macquarie||24,600||28 May 2020|
|TOPGLOV-C73||33.3||RHB||27,600||24 Dec 2020|
|HSI-C9S||22.6||Macquarie||7.40||28 Aug 2020|
|KOSSAN-C6||20.3||RHB||5.85||24 Dec 2020|
|SUPERMX-C86||17.8||RHB||1.90||27 Oct 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.