Bargain hunting in CIMB warrants

STRUCTURED warrants turnover for the week remained rather muted as investors took a breather ahead of the long weekend. As at Thursday, total warrants turnover touched RM67.8 million with 646.8 million units traded. Top underlying for the week was an unexpected stock, whose share price suffered a blow, ending the week 5.8% lower at RM6.36.

Despite a strong performance in the share price year-to-date, banking giant CIMB Group underwent a sell-down on Tuesday and Wednesday after Mitsubishi UFJ Financial Group (MUFG), a long-time shareholder of CIMB, announced that it was divesting its 412.5 million block of CIMB shares at a price between RM6.15 and RM6.30 apiece. The Japanese financial services giant ended up selling the shares at RM6.20 apiece through an overnight block trade. News of MUFG’s exit could have been the main trigger for the selldown in CIMB shares on Tuesday, wiping out more than RM2 billion off the group’s market capitalisation.

Trading in call warrants over CIMB gained interest during the sell-down. One of the top warrants over CIMB, CIMB-C24, tracked the underlying closely, falling 19.1% to RM0.085 on Tuesday. Investors were seen bargain hunting in this warrant, net buying close to 10 million units with hopes of a rebound in the underlying share price. CIMB-C24 commands a high effecting gearing of 8.7 times, meaning, with all other factors constant, the warrant price will move about 8.7% for every 1% move in the underlying share price.

In foreign warrants, call warrant HSI-C1P remained the top traded index warrant as it gained 10.3% at RM0.800. Put warrant HSI-H2L, meanwhile, was still quite active despite the warrant being on a wide spread. It is very important for investors to always refer to the Live Matrix to check if a warrant is on a wide-offer spread. For this warrant, the issuer has widened the offer price due to the far out-of-the-money exercise level of 25,800 points. As other warrants

TOP 5 WARRANTS BY TURNOVER

Warrant Name HENGYUAN-CA CIMB-C27 HSI-C1P ECONBHD-CA CIMB-C24 Turnover (‘mil) 4.6 2.8 2.8 2.4 2.3 Issuer RHB Kenanga Macquarie RHB Macquarie

may not have a Live Matrix, it is essential to always check where the market makers’ prices are.

To view the full list of structured warrants available on Bursa Malaysia, visit malaysiawarrants. com.my. 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.