FGV warrants in focus as share price declines 18.8%
FELDA Global Ventures (FGV) experienced a lacklustre performance last week, recording a total loss of 18.8%. The share price of FGV plunged to RM1.55 on Wednesday, its lowest within the third quarter of this year (3Q16). The weak share price came on the back of its financial results for the third quarter, showing a 7.1% drop in its revenue to RM4.19 billion. Its pre-tax profit tumbled 93% to RM14.14 million year-onyear. FGV stated that the decline was largely due to lower crude palm oil production, higher raw sugar costs, lower earnings from downstream segment and losses incurred by a jointly controlled entity. FGV’s weak share price was exacerbated by another headline which stated that FGV confirmed an investigation is ongoing into possible fraud at its 50%-owned unit in Turkey.
Following this, three call warrants over FGV, namely FGV-C16, FGV-C12, and FGV-C17 were in the spotlight last week. Overall, warrants over FGV recorded trading volume of 294.0 million units, representing 9.9% of the total warrants turnover, coming in second after the Hang Seng Index (HSI) warrants.
Bargain hunters took the opportunity of the weak share price, going on a shopping spree buying these warrants. For instance, FGV-C17 had investors accumulating a total of 11.7 million units out of 51.7 million units traded throughout the week. The bid price of FGV-C17 tumbled 50.0% to close at RM0.045 week on week.
Last week, Bank Negara Malaysia decided to keep the Overnight Policy Rate (OPR) unchanged at 3.0% at its Monetary Policy Committee (MPC) meeting onWednesday. The outcome was already anticipated by many, and Bank Negara said it is consistent to ensure that the domestic economy continues on a steady growth path amid stable inflation, supported by continued healthy financial intermediation in the economy.
The local bourse’s FBM KLCI inched up 0.2% week on week, closing at 1,627.26 points on Friday. Month to date, the FBM KLCI is down 2.7%.
Looking at foreign indices, the Hang Seng futures were on an upward momentum, climbing 399 points or 1.8% week on week. The HSI futures closed in positive territory, finishing at 22,730 points last Friday. Bullish investors were seen heavily trading the HSI calls, notably HSI-C48, a call warrant over HSI. This warrant, which will be expiring at the end of next month, was the most popular warrant as investors traded 117.4 million units. The warrant’s bid price rose 30.2% week on week as it ended at RM0.345 on Friday.
For more information on index warrants, visit https:// www.malaysiawarrants.com. my/indexsw.
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.