Maybank Investment Bank issues new put warrants, call warrants
KUCHING: Maybank Investment Bank Berhad (Maybank IB) has issued four new European style cash-settled put warrants and four new European style cash-settled call warrants over the ordinary shares of CIMB Group Holdings Bhd, Genting Malaysia Bhd, My EG Services Bhd, and SP Setia Bhd respectively, with tenors of approximately seven months and an issue size of 100 million warrants each.
Put warrants allow investors with a bearish view on the underlying shares to benefit from a downward share price movement and typically increase in value when the price of the underlying share depreciates.
On the contrary, the more regularly issued call warrants allow investors with a bullish view on the underlying shares to benefit from a rising share price and increase in value when the price of the underlying share appreciates.
This issuance is in line with Maybank IB Research’s view that besides the increasingly tangible earning headwinds due to the COVID19 lockdown, Malaysia’s economic outlook is further challenged by sharply lower commodity prices and continuing governance uncertainties.
Furthermore, foreign investors have sold RM2.7 billion net worth of Malaysia equities in April 2020, bringing the cumulative foreign net sell to MYR10.4 billion in the first four months of 2020.
In light of the uncertainties impacting the economy and equity market in the coming months, our put-call warrant pairing issuance provides investors an opportunity to express their short-term bullish or bearish views on the underlying shares.
This allows investors to take advantage of any decline in share prices should the economic landscape and corporate fundamentals deteriorate further and participate in a technical rebound or sustained recovery from the recent major sell-off.
Investors are able to gain exposure to the banking, gaming, technology, and property sectors of the Malaysian economy through these warrants in-line with their personal directional outlook.
Additionally, call and put warrants are leveraged instruments that could potentially magnify any investment gains (or losses) should the directional views on the underlying shares materialise or otherwise.