Trump’s shock win sparks trading spree

LAST WEEK was exciting for the structured warrants market as the Americans elected Donald Trump as the 45th president of the United States on Tuesday.

Global markets turned jittery and Bursa Malaysia’s FBM KLCI took a beating on Wednesday, shedding nearly 1% to close at 1,647.62. Investors were given a small window of relief on Thursday before the market tanked a further 18.60 points or 1.1% on Friday to end the week at 1,634.19. The local bourse lost 0.9% week on week as uncertainty continues to loom.

As the votes were being counted during our market hours last Wednesday, the structured warrants market was the most active despite most bourses being in the red. Turnover on Wednesday spiked to a year-to- date high with a turnover of RM154 million. Out of this, 85% came from index warrants. Warrants over the volatile Hang Seng Index (HSI) were in focus as the Hang Seng Futures tumbled 2.3% to 22,403. Investors were on a buying spree, accumulating various HSI call warrants, including HSI-C48, HSIC60 and HSI-C66 as the market plunged.

Investors were rewarded on Thursday as the HSI Futures took an about-turn, rebounding 2.4% to 22,932. As these call warrants track the futures contracts, they followed suit and rebounded with the HSI-C60 gaining a hefty 20.8%. Conversely, put index warrants will move in an inverse direction as the underlying futures fall in value as futures increases.

With various index warrants in

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the market, investors are now able to gain exposure to foreign stock indices which include the China A50 Index, the Hang Seng Index and even the S&P500 Index. These additions are on top of the existing warrants over the FBM KLCI and the Malaysian counters.

For the week ended Nov 11, S&P500 warrants were more active than usual as investors were trading in the US market during our Malaysian time zone.

These warrants track the S&P500 e-mini futures that trade throughout the full trading hours of the Bursa main board. Specifically, call warrant SP500-C1 had 9.6 million units traded on Wednesday as it fell 21.4% to

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.