KUALA LUMPUR (July 14): Supermax Corp Bhd’s structured call warrants are currently dominating Bursa Malaysia’s top gainer list, with its structured put warrants continuing to pique investor interest.
As of the noon market close, Supermax’s Supermax-C78, Supermax-C80, Supermax C-83, Supermax C-77, Supermax-C87, Supermax C-85, Supermax C-89, Supermax C-86, Supermax C-82, Supermax-C84, Supermax-C88 and Supermax-C90 call warrants were among the top 20 gainers on the local bourse today.
In particular, the Supermax-C78 call warrants were the top gainer today, rising by 26.86% or RM1.87 to RM8.80.
Meanwhile, the Supermax-C80 call warrants were the fourth top gainer on the local bourse, rising by 13.69% or RM1.31 to RM10.88.
Additionally, the Supermax-C83 warrants were the fifth top gainer, rising by 13.82% or RM1.31 to RM10.54.
Meanwhile, Supermax’s put warrants (Supermax-HB) were the 13th most actively traded security on the local stock exchange today, rising by 4.26% or a sen higher to 24.5 sen. A total of 96.84 million units had been traded at the end of the morning trading session.
Supermax shares themselves reached a new record high of RM17.54, after rising by 9.76% or RM1.56, now valuing it at some RM23.86 billion. Supermax was the second highest gainer in the morning trading session.
Meanwhile, Top Glove Corp’s Bhd’s very own structured put warrants (Top Glove-HA) also continued to see interest from investors. The warrants, which were the 18th most actively traded securities on Bursa, saw 62.06 million units change hands, rising by 2.5% or half a sen to 20.5 sen.
As for Top Glove, the counter also reached a new high of RM25 after rising by 4.17% or RM1 at the noon market close. Top Glove now boasts a market capitalisation of RM67.43 billion and is currently the sixth highest gainer on the local bourse.
For one warrant expert, rubber glove call warrants are not a cheaper proxy for rubber glove stocks as warrants have leverage.
He said conventional wisdom dictates that call warrants can result in less capital being deployed when it comes to getting the same returns — achieving the same amount of shares for less against buying the shares directly.
“As such, investors have to be aware that this only happens when market conditions are optimum and everything plays out well,” he noted, adding that in the near term only, investors can look at rubber glove call warrants or maintain their position.
At the same time, he said that there is stamp duty exemption for call warrants.
As for whether rubber glove put warrants are a good position for investors to hedge from, he said that at current levels, which are “inflated”, rubber glove put warrants are not optimal for hedging.
“For example, if Supermax's put warrant break-even point is 30 sen, the risk is very big because it is unlikely at this moment that Supermax shares would suddenly drop down to that level,” he said.
According to Bursa Malaysia’s website, structured warrants are proprietary instruments issued by a third party issuer (usually an eligible broker or financial institution) that give holders the right, but not the obligation, to buy or sell the underlying instruments in the future at a fixed price.
“Essentially, you are making a 'reservation' to buy or sell a predetermined number of the underlying instruments at a certain price in the future when you invest in structured warrants,” it explained.
As such, structured call warrants give holders the right to buy the underlying shares at a specified price within a limited period of time.
Conversely, put warrants give holders the right to sell the underlying shares at a specified price within a limited period of time.
Yesterday saw Top Glove-HA soar by 207% and Supermax-HB by 291% after their underlying shares reached new highs.