Trading in warrants over HSI soars as index retreats

THE Hong Kong market had a rough start last week, with the Hang Seng Index (HSI) losing 1.3% on Tuesday. The HSI continued to slide for three consecutive days before gaining 0.9% to close at 23,233.31 on Friday, losing as much as 2.6% for the week.

Warrants over the HSI were actively traded, with call warrant HSI-C36 leading the pack. Investors net bought 3.2 million units out of the 66.7 million traded last week as the call warrant lost 50%. Investors should note that HSI-C36 will expire on Oct 28 and Oct 25 will be its last trading day.

HSI-C66, one of the latest HSI warrants to be listed on Bursa Malaysia, emerged as an investor favourite, with 51.1 million units changing hands. Investors were seen accumulating the call warrant which expires on March 30, 2017 with a strike level of 26,000, taking home 8.3 million last week as the underlying index retreated. The call warrant closed 16.1% lower, week-on-week.

There was demand for put warrant HSI-H63 as some investors took an opposing view and accumulated the put warrant, buying 1.2 million units on Friday. The put warrant moved against the falling market and closed 21.0% higher at RM0.490. As of

TOP 5 TRADED WARRANTS

Warrant Name HSI-C36 MYEG-CY FGV-C16 HSI-C66 UEMS-C28 Volume (mil. units) 59.9 54.6 43.8 46.4 42.9 Closing Bid (RM) 0.285 0.125 0.205 0.390 0.065

Friday, a total of 4.4 million units of SI-H63 are held by investors.

In warrants over Malaysian counters, investors were seen selling back 8.1 million units of AAX-CX last Monday, echoing its underlying share price fall of 1.3%. There were 39.1 million units traded as the warrant gained 11.1% week-on-week, closing at RM0.050. The warrant offers an effective gearing of 3.0x, which means, if other factors held constant, AAX-CX tends to move about 3.0% for every 1% move in its underlying share price.

Elsewhere, MYEG-CY and FGV-C16 also recorded high trading volumes and both made it to the top 5 most active structured Issuer Exercise Price (RM) 23,200 2.15 1.95 26,000 1.05

warrants traded. MYEG-CY saw investors trading 56.1 million units while FGV-C16 had 51.2 million units traded.

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.