Volume jumps 99.5% as investors focus on cheap buys

LAST week’s trading in warrants saw a large increase in volume to 1.2B units traded, valued at RM140.7 million. Compared to the previous week, volume has increased 99.5% from 607 million units traded, while trading value actually declined 9.9% to RM140.7 million. This indicates that investors are trading cheaper warrants on average, as supported by some of the top traded warrants in the table (right). Warrants over the Hang Seng Index (HSI) contributed 9.4% of trading value to this week’s warrant space, as the increased volatility provided trading opportunities.

One of the counters with increased trading activity in the warrant market was SP Setia, a property company. The company released its financial results for the third quarter of 2017 (3Q17) the previous week, seeing a surge of 89% in its net profit from RM134.1 million to RM253.2 million, spurred by higher contribution from its property development division. The share price surged, closing the week at RM3.49, up 6.1% week-on-week (w-o-w) from RM3.29.

Call warrant SP Setia-C2 over SP Setia, saw vigorous trading during the week, ending the week with 30.6 million units changing hands. This warrant has an effective gearing of 7.4x, which means that (all other factors held constant) it tends to move 7.4% for every 1% move in the underlying share price.

TOP 5 WARRANTS BY VOLUME

BJCORP-C5 PETDAG-CS SUPERMX-C27 SUPERMX-C32 HENGYUAN-CH

In other news, Supermax’s share price has had a rocky year and a lacklustre start to the week. However, last Friday, the stock surged 7.4% in one day from RM1.90 to RM2.04, ending the week 9.7% higher w-o-w from the previous week’s RM1.86. As a result, warrants over Supermax were popular last Friday, including SupermxC29 where investors were seen buying 4.6 million units out of 15.7M units traded on the day. Throughout the week, SupermxC29, saw investors trading more than 25.3 million, jumping 100% w-o-w as it closed at RM0.07 on Friday.

In foreign index, the benchmark HSI had a very volatile week. It broke the 29,000 mark, but saw a decline to below 29,000 mark, ending Wednesday at 28,887 points. It recovered slightly on Thursday and surged further on Friday, ending the week at 29,199.0 points, up 0.3% from 29,120.9 points the previous week.

The most notable warrants over HSI were the HSI put, HSI-H2Q and HSI call,

HSI-C1P. The put, HSI-H2Q saw 12.7 million units traded, valued at RM2.8 million, whereas the call, HSI-C1P saw 6.8 million units traded, valued at RM6.2 million. Call warrants move in tandem with the underlying futures, rising in value as the underlying futures increase, whereas put warrants are the opposite – rising in value as the underlying futures decrease.

To view the full list of structured warrants available on Bursa Malaysia, kindly 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.