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Volatility continues as trade war intensifies

Warrants Commentary (17 June to 21 June)

Last week, President Trump announced on a Twitter post that Chinese leader Xi Jinping has agreed to meet with him at the G20 summit in Japan.  The announcement acted as a catalyst for the Hang Seng Index (HSI) futures, pushing it up 702 points or 2.6% on Wednesday to close at 28,146. On Thursday, riding on the same momentum, the HSI futures gained an additional 1.3% to 28,515, before closing 0.3% lower to end the week at 28,422 points. Week-on-week, the HSI futures rallied 5.1%, the highest gains since November last year.

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TM-C41 took over the stock warrant space

Warrants Commentary (27 May to 31 May)

The Malaysian warrants market was revived last week following the shorter trading week in the preceding week, sporting a turnover of RM452.5mil, 63.0% higher than the preceding week. Telecommunications giant Telekom Malaysia (TM) reported a net profit of RM308.3mil for the first quarter ended 31 March  2019, almost doubling the net profit of RM157.2mil for the same period a year ago. The sizable growth can be attributed to a reduction in TM’s operating costs. The share price of TM soared 27.2% following the positive news to close at RM3.46 on Thursday (30 May), the highest level since August 2018. Call warrant TM-C41 was the most notable warrant over TM with RM3.0mil traded on Thursday (30 May) and a total RM7.7mil traded last week. TM-C41 tracked the underlying price movement closely, gaining a substantial 267.7% week-on-week (w-o-w).

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HSI warrants actively traded despite shorter week

Warrants Commentary (20 May to 24 May)

The Hong Kong’s Hang Seng Index (HSI) extended its third week of decline as the trade dispute between US and China escalated to another level. Recently, the Trump administration restricted US technology sales to Huawei and several other foreign-owned companies, based on Trump’s claim that the Chinese telco giant poses a national security risk (Market Watch, 20 May). Following this, Huawei was added into the US’ “entity list”, which bans the company from acquiring technology from US firms without prior government approval.

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US-China trade battle churns markets

Warrants Commentary (13 May to 17 May)

The Hong Kong market was closed last Monday (13 May) in conjunction with the Birthday of the Buddha holiday. Upon reopening, the Hang Seng Index (HSI) futures plunged 1.7% to 27,858 points as markets churned when China retaliated against the US by raising tariffs on USD60bil in US goods to 25%. Though the HSI futures then rebounded 0.8% in total over Wednesday and Thursday, the rally failed to take hold as the futures fell 1.3% on Friday to finish the week at 27,730 points, down 2.1% week-on-week (w-o-w). Warrants over the HSI took up a good 81.5% of turnover for the week, despite having a slightly shorter trading week.

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Turbulent week for the HSI futures as tariffs loomed

Warrants Commentary (6 May to 10 May)

It was a volatile week for the Hang Seng Index (HSI) futures as markets tried to price in the US’ imposition of higher tariffs on US$200bil. of Chinese imports.  The HSI futures plunged 3.0% on Monday, its worst decline since 23 October 2018. After a small rebound on Tuesday, the futures continued on its descend with a 1.1% and 2.7% decline on Wednesday and Thursday, respectively.  On Friday, after the tariff hike on $200bil. worth of Chinese goods to 25% has been confirmed, the HSI futures took a plunge to below the 28,000 level, before rebounding to close at 28,327, representing a week-on-week (w-o-w) decline of 5.1%.

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HSI warrants in the spotlight

Warrants Commentary (29 Apr to 3 May 2019)

Last week, total warrants turnover for the 4-day trading week recorded at RM349mil., mainly consisted of warrants over the Hang Seng Index (HSI), representing 71.4% of turnover. The HSI futures kicked off the week on a strong bullish momentum, soaring 1.0% to 29,679 points on Monday before falling 0.7% to 29,468 points ahead of the Labor Day holiday. However, the index rebounded following the public holiday, registering a total gain of  1.3% over two days. The HSI closed up last Friday on hopes of policy support after latest data showed Hong Kong’s first quarter economy grew 0.5% from last year (Business Standard, 3 May).

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Call warrant HSI-C5D defends its throne

Warrants Commentary (15 Apr to 19 Apr 2019)

The warrants market saw a dip in turnover last week to RM419.8mil, 25.0% lower week-on-week (w-o-w).  The Hang Seng Index (HSI) futures started the week on a bullish note by hitting 30,336.0 points on Monday morning, the highest level this year, before erasing all gains to close 0.4% lower on the same day. Later on, the HSI futures rallied a total of 1.1% over Tuesday and Wednesday, also backed by China’s announcement that its first quarter gross domestic product (GDP) grew to 6.4%, beating analysts’ estimates (CNBC, 16 Apr). The futures then fell 0.7% the next day before recovering 0.5% to 30,094.0 points on Friday, to finish 0.5% higher w-o-w.

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HSI-C5D dominated the warrants market

Warrants Commentary (8 Apr to 12 Apr 2019)

Last week, the warrants market in Malaysia recorded a turnover of RM535.8mil, 32.4% higher than the previous week due to the surge in trading activity for warrants over the Hang Seng Index (HSI) and the iShares A50 China Index ETF (A50 China ETF).

The HSI futures started the week on a strong note, hitting the year-to-date high of 30,295.0 points on Tuesday. However, the bullish momentum did not last long as the HSI futures then plunged on Wednesday and Thursday following escalation in trade tension between the EU and the US over disputed aviation subsidies (Bloomberg, 12 Apr).

Warrants over the HSI continued to take the crown in the Malaysian warrants space with RM301.2mil traded last week, making up 56.2% of the total warrants turnover. Call warrant HSI-C5D emerged as the most active warrant with RM122.5mil traded. Bargain hunters were aggressively collecting this call warrant on Wednesday and Thursday, taking home a total of 14.2mil units as the bid price fell 20.2%.

On the other hand, the A50 China ETF went on a roller coaster ride last week as it closed in the positive territory for the first 3 days of the week before falling 2.2% on Thursday, then rebounded 0.5% to close at HKD15.16 on Friday. Investors appear to be bearish on the A50 China ETF as the put warrant A50CHIN-H29 was the most popular among all warrants over the A50 China ETF; its bid price surged 15.5% on Thursday. Put warrants move in the opposite direction from the underlying index or shares, and can therefore be used as a hedging tool for investors’ portfolios.

For single stocks, warrants over FGV Holdings (FGV) stole the limelight last week as the company made headlines. FGV’s share price climbed 9.2% from Monday to Wednesday after the Malaysian government agreed to inject a total of RM6.2bil into Felda to restructure its operations and to strengthen its governance (The Star, 9 Apr). The top traded stock warrant, FGV-C73, tracked the underlying price movement closely, gaining 31.3% over the first 3 days of the week.

Top warrants by value traded:

Warrant name Value
(MYR ’mil)
Issuer Exercise level Expiry date
HSI-C5D 122.5 Macquarie 30,000 30 May 2019
HSI-H6G 35.1 Macquarie 28,000 30 May 2019
HSI-C5C 31.9 Macquarie 31,400 30 May 2019
HSI-C5J 25.8 Macquarie 28,800 30 Jul 2019
HSI-C5G 25.5 Macquarie 29,400 27 Jun 2019

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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.

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MYEG-C65 takes over to be top traded stock warrant

Warrants Commentary (1 Apr to 5 Apr 2019)

Once again, the call warrants over My E.G. Services (MYEG) were actively traded as the shares continued to be volatile with the various news headlines surrounding it. Last Wednesday (3 Apr), MYEG’s share price fell 2.7% to RM1.42 following the cabinet committee’s statement that MYEG, along with a few other companies, are under review for monopolistic ways.

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