HSI heavily traded as index rebounds

LAST week, the US-China trade war escalated sharply as the Trump administration announced that it is imposing 10% tariffs on a further US$200 billion (RM827 billion) worth of Chinese good, with effect from today.

Following the announcement, the Hang Seng Index (HSI) fell 1.3% or 353.6 points to finish at 26,932.9 points on Monday. However, it rebounded 0.6% to finish above the 27,000 level to 27,084.7 points the following day, after the Chinese government retaliated by slapping additional tariffs on US$60 billion of US imports. The HSI continued to gain for the rest of the week, closing at 27,953.6 points last Friday, recording a 2.4% week-on-week gain.

HSI warrants, with a turnover of RM319.7 million last week, remained the biggest contributor to the warrants market turnover, accounting for 79.0% of value traded. Call warrants over the HSI were heavily traded, recording a volume of 525.3 million units.

HSI-C3Q emerged as the top traded warrant with 147.8 million units traded. This call warrant tracked the underlying futures closely, rising 24.2% to close at RM0.565 ahead of the weekend. In view of the HSI futures’ 1.8% rise last Friday, investors took profit on 49.2 million units of HSI calls and

TOP 5 WARRANTS BY TRADED VOLUME:

collected 22.4 million units of HSI puts in one day.

Interestingly, A50CHIN-H17, a put warrant over the China A50 Index ETF, stole the limelight, coming in as one of the top 10 most actively traded warrants last week. Investors traded 48.7 million units over the week and accumulated 378,000 units of A50CHIN-H17 last Friday. This warrant’s bid price plunged 35.3% week on week as its underlying rose 6.3%.

Meanwhile, for Malaysian single stocks, the call warrant over Sapura Energy, SAPNRG-C69, was the most popular warrant with 34.7 million units traded last week. SAPNRGC69 has an exercise price of RM0.550 and will be expiring on April 25, 2019, which means that this warrant has the longest tenure among all SAPE warrants listed on Bursa Malaysia.

Warrants with a longer time to expire generally experience slower time decay than shorter-dated warrants, which can be translated to a lower level of gearing and risk (all other factors held constant). SAPRNG-C69’s bid price fell 13.3% week on week as its mother share fell 6.6%.

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.