Maybank, SapuraKencana lead the warrants market

MAYBANK-C9 came out top in the warrant volume chart for the week ended March 20, 2015, beating the usual suspects such as the KLCI and HSI warrants. A total of 35.1 million units of MAYBANK-C9 were traded throughout the week, contributing 7.3% to the total warrant volume.

Last Thursday, Fitch Ratings stated that Malaysia’s banking system exposure to 1MDB is a manageable risk. Fitch added that Malaysian banks have reasonably prudent lending practices that ought to limit the potential impact of default by any single borrower. This report probably boosted investors’ confidence, leading to the 0.8% increase in Maybank’s share price on Thursday.

Investors also actively traded SKPETRO-C8, with a total of 22.4 million units exchanging hands. However, trading on the underlying share was relatively quiet last week, with only 58.6 million units traded compared with its six-month daily average of 75 million units a week. According to Bloomberg, Malaysia’s biggest oil and gas services provider is able to withstand spending cuts from exploration and production. The company has also diversified its business across geographical markets, services and clients.

SapuraKencana’s share price fell 7sen to close the week at RM2.27, down 2.9%. With an effective gearing ratio of 6.9 times, call warrant SKPETRO-C8 fell 16.7%, moving in tandem with the underlying share price. Effective gearing represents the relationship between a warrant price and its underlying. It is an estimate of the change in a warrant’s value for a given percent change in the price of the underlying. In this example, SKPETRO-C8 has an effective gearing of 6.9 times, meaning it will move approximately 20.0% for a 1% movement in the underlying share, assuming other factors remain constant.

The following table shows the top five single stock warrants traded for the week ending March 20, 2015.

To view the full list of structured warrants, head to malaysiawarrants.com. my.