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.
KUALA LUMPUR: Macquarie Capital Securities (Malaysia) Bhd has issued a total of 1,000 structured warrants in Malaysia since its debut in October 2014, with the latest being the issuance of 12 new warrants on Thursday. The global financial services provider said on Thursday that over the past three years, Macquarie has been the leading warrant issuer in Malaysia, driving education, new technology and keeping investors informed via the structured warrants website malaysiawarrants.com.my. Macquarie is committed to providing the highest quality market making. Year to date, Macquarie has commanded the leadingRead More
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KUCHING: Analysts are positive on the outlook of the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) as they project positive growth for the next two years. The research arm of AmInvestment Bank Bhd (AmInvestment Bank) said it was positive on the outlook for the FBM KLCI, projecting the FBM KLCI’s earnings to grow […]
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PETALING JAYA: AmBank Research, which called the first quarter reporting season “a tad discouraging”, has projected FBM KLCI’s earnings to grow by 5.3% and 7.1% in 2018 and 2019, underpinned by a gross domestic product growth of 5.5% and 5.3% respectively.
Its year-end targets of the local bourse are forecast at 1,900 points and 2,040 points in 2018 and 2019 respectively.
“While the 1Q 2018 reporting season has been a tad discouraging so far, it has not derailed the positive growth trajectory of FBM KLCI’s earnings,” the research house said.
It said at about two-thirds through the 1Q 2018 reporting season (68% of its stock universe having reported), corporate earnings have thus far been relatively unremarkable – with 9%, 64% and 27% beating, meeting and missing its projections respectively.
“In terms of earnings growth forecasts of ‘all sectors’ – a broader but slightly more volatile earnings gauge encompassing the entire universe of our stock coverage – the numbers for 2018 and 2019 have been adjusted to 11.4% and 10.4%, from 15.6% and 10.6% previously,” said AmBank.
It believes the key catalysts for the FBM KLCI could come from the normalisation of the market risk premium as greater clarity on new government policies emerges; improved sentiment towards emerging markets, which are experiencing an outflow of funds at present, and a more level playing field across sectors that may unleash the growth potential in corporate Malaysia.
On the other hand, FBM KLCI could also be weighed down by stronger-than-expected US inflation and wage growth which could lead to a steeper rate hike cycle in the US and a stronger US dollar, which could spur more outflows from emerging markets; the escalation in the US-China trade war and geopolitical tensions; as well as earnings disappointments from FBM KLCI heavyweights.
“For exposure to consumer spending, we pick banks with strong consumer banking franchise (Public Bank and BIMB), apart from consumer/auto stocks (Berjaya Food, Power Root and Bermaz). We like exporters that benefit from strong external demand (Top Glove, V.S. Industry and Inari Amertron). Against a backdrop of firm oil prices, we pick certain defensive oil & gas names (Yinson and Dialog).”
According to Rakuten Trade Sdn Bhd head of research Kenny Yee, the local bourse is expected to trend between 1,750 and 1,800 points in the short term.
The FBM KLCI closed 21.56 points or 1.2% lower to 1,775.84 points on Monday on continued selling pressure.
Yee told SunBiz that the KLCI will trade below 1,800 points for the time being before improving later this year.
“Fundamentals remain solid as depicted from the ongoing results for first quarter which have been rather decent so far. For us, we remain positive with our 2018 KLCI target still at 1,960 barring any nasty surprises from Malaysian corporates despite the uncertainties overshadowing the construction and toll concessionaires at the moment,” Yee explained.
Meanwhile, Nomura Securities Malaysia Sdn Bhd head of equity research Tushar Mohata said he is neutral on the local stock market as the new government should be given the benefit of the doubt to come out with their economic policies and direction to address some of the fiscal concerns which appears to worry investors.
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PETALING JAYA: Gunung Capital Bhd which saw a more than 18-fold increase in net profit for the first quarter ended March 31, is cautious of extension to its National Service Programme contract given the new government’s target of reducing operational expenditure.
The company made a RM2.66 million net profit for the quarter under review, compared with RM146,000 in the same quarter a year ago. The service contract has contributed to revenue for the past seven years including the quarter under review.
Revenue for the quarter under review rose by 18.5% to RM12.04 million from RM10.61 million in the preceding year’s corresponding quarter, driven by its transportation division which saw a constant revenue from the contract to ferry children from the Defence Ministry (Mindef), as well as the 3,989 effective day-trips made for the National Service Program.
The group is expecting to see cost pressure although it expects service-contract revenues to continue to provide a positive cashflow for the group in the current financial year.
Meanwhile, the shuttle bus service for the International Islamic University of Malaysia, and the Mindef contract to ferry school children, and ad-hoc charters will continue throughout FY2018.
“In the medium term, we are looking forward to the commissioning of a number of small hydro projects in Perak in FY2018, and FY2019, which will contribute to Gunung’s long-term revenue and earnings, and enhance Gunung’s growth potential,” said its board of directors.
“The long-term stable income stream will reduce Gunung’s dependency on incomes solely from chartering land-based transportation assets. Under our small hydro portfolio there are five sites with an installed capacity of 34.25MW at various stages of construction, and four sites with an installed capacity of 97.8MW, which will start construction in FY2018,” it added.
The stock closed unchanged at 38.5 sen with some 12,000 shares done.
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