Macquarie expects shift to index warrants to continue amid market volatility

PETALING JAYA: Macquarie Malaysia expects the shift to index warrants to continue as volatility in the market increases.
This is especially for investors looking to profit from any short-term falls in prices, as put warrants are one of the few ways that Malaysian investors can profit from falls in the stock market, according to head of equity derivatives products for Macquarie in Asia Barnaby Matthews.

Index warrants were actively traded from March 2018 onwards, particularly the call and put warrants over the Hang Seng Index (HSI), which made up 43.9% of warrants turnover in the first five months of 2018.
Macquarie is the only structured warrants issuer to list structured warrants over the HSI on the Bursa.
Matthews also noted that the recent rise in trading activity reflects further growth potential in the Malaysian warrant market, with structured warrants turnover increasing to an average of RM97.5 million per day for the first five months of 2018 compared with an average of RM25 million per day in 2017.
This was contributed by increased volatility to the Malaysian and global equity markets.
“With rising global geopolitical tensions, trade tensions between China and the US, and Malaysia’s General Election all adding to investor uncertainty.”
Macquarie said the daily turnover hit a high of RM613.1 million on April 6, 2018, which represented a whopping 40.2% of the total turnover on the whole of the Bursa for that day.
“With the local market becoming increasingly uncertain, warrants over Malaysian single stocks took up a smaller piece of the warrants market, constituting 52.3% of warrants turnover in the first five months of 2018, compared to 79.2% in 2017.”
“Warrants over Sapura Energy, Supermax, Hengyuan Refining and My EG Services were actively traded during this period due to renewed volatility, especially around the GE period.”
Following the issuance of 12 new warrants today, Macquarie has issued a total of 1,000 structured warrants in Malaysia since its debut in October 2014.
Year-to-date, Macquarie has commanded the leading market share, with 60.1%1 of the Malaysian warrant market turnover.