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Trading in HSI warrants surge as HSI suffers biggest decline in months

Warrants Commentary (11 to 15 November)

The turnover for Malaysia warrants market for the week ended 15 November 2019 surged 17.5% to RM341.8mil week-on-week (w-o-w). There was an increased trading activity in the Hang Seng Index (HSI) warrants, as the turnover increased by 36.2% to RM287.4mil from the previous week.

Last Monday (11 Nov), the HSI had its worst day in more than three months, tumbling by more than 700 points or 2.6% to finish  below  the 27,000  level at 26,926.6. Although the index rebounded 0.5% on Tuesday, it plunged a total 2.8% for the next two days, before eking out small gains  to close at 26,326.7 on Friday.

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Bullish trend extends another week

Warrants Commentary (4 to 8 November)

The overall Malaysia warrants turnover for last week came up to RM290.9mil, about 43% above the previous week’s turnover. Once again, warrants over the Hang Seng Index (HSI) dominated the warrants market, comprising 72.5% of turnover with RM211.0mil traded. Warrants over the iShares China A50 Index ETF (China A50 ETF) also held on to investors’ interests as they saw a total turnover of RM17.3mil, taking up 6.0% of the market.

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MYEG-C82 top traded among warrants over Malaysian counters

Warrants Commentary (29 October to 1 November)

Last week, overall warrants turnover shrank by 33.9% to RM203.1mil, partly due to the shorter week, in conjunction with the Deepavali holiday on Monday (28 Oct). Warrants over indices including the Hang Seng Index (HSI), FBM KLCI Index (FBMKLCI), S&P 500 Index (SP500) and the iShares China A50 Index ETF (China A50 ETF) make a combined turnover of RM152.8mil, contributing slightly over 76% of turnover. 

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HSI and China A50 ETF warrants took up 75% of the market

Warrants Commentary (21 October to 25 October)

Last week, warrants over the Hang Seng Index (HSI) and the iShares China A50 Index ETF (China A50 ETF) collectively comprised close to 75% of the Malaysia warrants market turnover. Warrants over the HSI, making up 69.2% of the market, continued to be popular last week as the HSI seesawed throughout the week. On Monday and Tuesday, the index rose 0.25% to 26,786.2 points, but the gain did not sustain as the index then fell 0.9% to 26,566.7 points on Wednesday, after news broke that the Chinese government was planning to replace Carrie Lam, Hong Kong’s chief executive (Financial Times, 23 Oct).

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HSI-C7F and HSI-H8B among investors’ favourites

Warrants Commentary (14 October to 18 October)

The Hang Seng Index (HSI) futures continued to trend higher last week after a strong performance from the prior week. Last Monday, the HSI futures opened at 26,420.0 and finished the day with a 0.5% gain. On the same day, the US said that they are eyeing to clinch ‘phase one’ of the US-China trade deal, though China wants another round of talks before signing, according to sources (CNBC, 14 Oct). The HSI futures fell 0.2% on Tuesday before rebounding 1.5% over the next two days to finish at 26,881.0 points on Thursday. The bullish momentum hit a wall on Friday when China released weaker than expected third quarter gross domestic product (GDP) data as a result of the prolonged trade dispute (Bloomberg, 18 Oct). The HSI futures pulled back from October’s high of 27,016.0 to close 0.8% lower at 26,675.0 last Friday.

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FBM KLCI warrants gain traction amid Budget 2020

Warrants Commentary (7 October to 11 October)

Last week kicked off with a headline from the US stating that they are banning 28 Chinese public securities bureaus and companies over their alleged role in facilitating human rights abuses in the Xinjiang region, China. In addition to this, the US put visa restrictions on Chinese officials, adding to tensions between the US and China ahead of their trade talks that were scheduled later in the week (CNBC, 8 Oct).  

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HSI declined further as protests intensified

Warrants Commentary (30 September to 4 October)

It was a rocky week for the Hong Kong Hang Seng Index (HSI) last week, with the index rising 0.5% to 26,092.3 points on Monday. The Hong Kong market was shut on Tuesday in conjunction with the National Day holiday; tensions ran high as the protests in Hong Kong continued. Monday’s rise did not sustain through the week, as the HSI fell 0.2% upon reopening on Wednesday; protests escalated further when an 18-year-old protester was injured with a shot to the chest as he swung a metal rod at a riot policeman (South China Morning Post, 2 Oct).

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Bargain hunting in HSI calls continued in bearish market

Warrants Commentary (17 to 20 September)

The overall warrants turnover for last week was RM342.3mil., a slight decrease of 1.4% from the week prior. The Hang Seng Index (HSI) warrants remained the biggest contributor, making up 80.6% of turnover. Last week, one of the top news was the benchmark interest rate cut, which saw the US Federal Reserve (the Fed) lower the interest rate by 0.25% to a range of 1.75% to 2% last Wednesday during its September meeting. This was the second rate cut since July this year, amid global growth concerns and muted inflation pressures. A top Fed official signalled Friday that further interest rate cuts could come before year-end (The New York Times, 20 Sept).

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Call warrant HSI-C7F rose 30% w-o-w

Warrants Commentary (10 to 13 September)

The Malaysian warrants market was sloppy last week, only clocking in a turnover of RM347.3mil., 10.7% lower compared to the prior week. Fears over the escalating trade war dampened last week as U.S. President Donald Trump decided to delay the tariffs hike on USD250bil. worth of Chinese goods as a “gesture of good will” ahead of the trade talks in October (South China Morning Post, 12 Sep). The Hang Seng Index (HSI) futures sustained the strong momentum from the prior week to record 2 consecutive weeks of gains. The HSI futures traded below the 27,000 mark last Tuesday but then saw huge buying throughout the day on Wednesday to finish at 27,109 points. On the same day, the Hong Kong Stock Exchange announced that they are going to make a USD36.6bil. bid for the London Stock Exchange (South China Morning Post, 11 Sep). The HSI futures were flirting around the 27,000 level on Thursday before breaking out to close at 27,309 points on Friday, advancing 2.7% week-on-week (w-o-w).

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Episodic week for HSI warrants

Warrants Commentary (2 to 6 September)

Last week saw a lower turnover in the Malaysian warrants market compared to the previous week, partly due to the shorter trading week. Total warrants turnover came up to RM388.7mil. for the week or RM97.2mil. on average per day, lower than the average of RM111.7mil. in the previous week. However, warrants turnover on Tuesday and Wednesday skyrocketed in view of the increased volatility in the Hang Seng Index (HSI); turnover for warrants over the HSI was RM326.1mil., comprising 83.9% of overall turnover.

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