FGV warrants shine as stock up 4.9%

WARRANTS over Malaysian counters continued its strong momentum, echoing the high trading volume on Bursa Malaysia. For the week ended March 17, warrants over Felda Global Ventures (FGV) and SapuraKencana Petroleum (SAKP) contributed about RM12.5 million and RM15.3 million respectively out of the RM146.4 million traded for the week.

Among warrants over FGV, FGV-C24 and FGV-C22 were firmly on top with RM4.3 million and RM3.2 million traded respectively for the week. FGV-C24 tracked the underlying closely, gaining as much as 12% on Monday as the underlying share price gained 5.5% and closed at RM1.93. FGV’s share price dipped 2.6% on Tuesday before its share price rebounded and ended the week at RM1.91, a 4.4% gain week-on-week. FGV-C24 followed closely, lost 6.9% before ending the week 11.5% higher at RM0.145.

FGV-C24 and FGV-C23, have the same exercise price of RM1.85 and the same expiry date of July 31, 2017. Last Friday, FGV-C23 closed at RM0.080 whereas FGV-C24 finished the week at RM0.140. This difference in their price despite the same strike price and expiry is due to the difference in exercise ratio with the former having a 3.5 to 1 and the latter a lower ratio at 2.5 to 1. The purpose of exercise ratio is just to break down the

TOP 5 TRADED WARRANTS

warrant into smaller parts, hence, the higher the ratio, the cheaper the warrant price if all else is equal. However, the warrant with the higher ratio will be less sensitive. Meaning to say, a warrant with a higher ratio will be cheaper in price, but require a larger movement in the underlying for it to move.

On the other hand, warrants over SAKP was also in demand last week with SKPETRO-C35 emerging as the top warrant over SAKP. The warrant recorded more than 60.2 million units in trade with the warrant gaining 13.8% for the week. The underlying share price, rebounded from the previous lacklustre performance by gaining 4.4% to end the week at RM1.91.

Elsewhere, the Hang Seng futures had two spikes during the week, on Monday and Thursday, where it gained 1.0% and 2.3% respectively. The warrant fell drastically, moving in an inverse direction as the underlying, which ended the week 743 points or 3.2% higher. Investors were heavily buying HSI-H79 as it fell, taking home 8.9 million units on Thursday and pushed the warrant to being completely sold out.

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.