Turnover hits RM559m as global share markets capitulate

LAST week’s global markets were in a sea of red following the US market meltdown. The rout began on Friday, Feb 2, when the Dow Jones Industrial Average skiedded 2.5% to 25,520.96 points. Then, on Monday, it plunged a further 4.6% to close at 24,345.75. There was some respite on Tuesday and Wednesday, but the Dow ultimately closed at 24,190.90 on Friday, down 5.2% on the week.

The Hang Seng Index (HSI) and the FTSE Bursa Malaysia KLCI (FBM KLCI) followed the Dow’s pattern, with both indices declining on Monday and Tuesday, and failing to recover their losses during the rest of the week. The HSI was down 9.5% and the FBM KLCI was lost 2.7%.

These events fuelled the warrants market last week, which saw a whopping 2.8 billion units of warrants traded, valued at RM559.5 million. Call and put warrants over HSI futures emerged the top traded warrants, accounting for almost half of last week’s turnover.

Call warrant HSI-C1X was tops with RM64.9 million traded. Call warrants move in tandem with the underlying; if the HSI futures recover from its decline, the call warrants will gain in value. The warrant bid price closed down 57.2% week on week, with investors taking home 14.0 million units at the end of the week. Call warrant HSI-C3B saw some RM29.9 million traded.

Put warrant HSI-H4C was the second most popular warrant with RM62.8 million traded. Put warrants move in an opposite direction from the underlying, which means that as the HSI futures declined during the week, the HSI-H4C gained in

TOP 5 WARRANTS BY VOLUME

HSI-C1X HSI-H4C HSI-H4A HSI-C3B DRBHCOM-C37 Macquarie Macquarie Macquarie Macquarie CIMB

value. The warrant bid price closed up 89% for the week. HSI-H4A, another put warrant,also saw some action with RM35.5 million traded.

In warrants over Malaysian stocks, DRB-Hicom was popular with investors last week, being largely resistant to the panic-selling environment. Despite experiencing a 3.5% drop to RM2.49 on Tuesday, DRB-Hicom’s share price recovered and held steady for the rest of week. It closed at RM2.55 on Friday, down 0.8% week on week. DRB-Hicom’s share price was supported by its positive outlook announcement regarding its strategic partnership with Chinese multinational automotive manufacturing company, Zhejiang Geely Holding.

Call warrant DRBHCOM-C37 emerged the top traded stock warrant last week, with RM24.5 million traded. Another notable call warrant, DRBHCOM-C55, is a newly listed warrant that made its debut last Thursday and was actively traded. Within just two days, DRBHCOM-C55 saw 28.8 units traded, valued at RM4 million. DRBHCOM-C55 has an exercise price of RM3.50, the highest among warrants over DRB-Hicom.

Warrants with a higher exercise price tend to have a higher gearing level and a higher level of risk than warrants with lower exercise price (all other factors held constant). This is because warrants with higher gearing tend to move in greater percentages than warrants with lower gearing.

If you have any questions or need further assistance, please do not hesitate to contact us via our hotline at 03-2059 8840 or email us at info malaysiawarrants.com. my.

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.