Transcription
Introduction toStructured WarrantsLeong Kah Meng, CFAHead of Warrants Sales, MalaysiaMacquarie Capital Securities (M) Sdn BhdSTRICTLY CONFIDENTIAL
DisclaimerPlease DO NOT download,upload, post or otherwise makeavailable any material from thiswebinar to the public without ourprior consent.This presentation material hasnot been reviewed by theSecurities CommissionMalaysia.STRICTLY CONFIDENTIAL
Important information Investment products including warrants are subject to significant investment risks, including thepossible loss of the principal amount invested Where past performance is referred to, it is not indicative of future performance. Examples quoted inthis presentation are for illustration purposes only and does not represent any investment views orstrategies. Advice should be sought from a financial adviser regarding the suitability of the investment productbefore you commit to invest in itPAGE 3
DisclaimerThe information is produced by Macquarie Capital Securities (Malaysia) Sdn. Bhd. (Company No 463469-W) ("MCSM") which is the issuer of the Macquarie warrants in Malaysia(“Warrants”). The Warrants are guaranteed by Macquarie Financial Holdings Limited. The information is intended for residents of Malaysia only. No part of this presentation maybe copied, either in whole or in part, or distributed to any other person without MCSM’s consent. This presentation material has not been reviewed by the Securities CommissionMalaysia.Any material provided herein, including any indicative terms are provided for information and educational purposes only and does not constitute an offer, a solicitation of an offer, orany advice or recommendation to conclude any transaction. While MCSM provides the information in good faith and derived from sources believed to be reliable, MCSM does notrepresent or warrant the completeness, reliability, accuracy, timeliness or fitness for any purpose of any of the material and it accepts no responsibility for the accuracy,completeness or timeliness of the information.The Warrants constitute general unsecured contractual obligations of the issuer and of no other person and the guarantee constitutes the general unsecured contractual obligationsof the guarantor and of no other person. If you purchase the Warrants, you are relying on the creditworthiness of the issuer and the guarantor and have no recourse/ rights againstthe underlying corporation, the underlying exchange traded funds and the manager or trustee, the underlying index sponsor that compiles and publishes the underlying index andthe constituents companies of the index.You are warned that the price or level of the underlying financial instruments and Warrants may fall in value as rapidly as it may rise and you may sustain a total loss of yourinvestment. You should therefore make sure you understand the terms and conditions of the Warrants offered, the risk factors involved. Do not invest in them unless you fullyunderstand and are willing to assume the risks associated with them. In preparing the information contained herein, MCSM did not take into account the investment objectives,financial situation and particular needs of the reader.Before making an investment decision on the basis of the information contained herein, you should consult, to the extent necessary, your own independent professional advisers.You should read the full details of the Warrants, including the risk factors, which are set out in the most recent Base Prospectus and the relevant termsheet. Copies of thedocuments may be obtained from www.malaysiawarrants.com.my.MCSM is the market maker for the Warrants (acting through Macquarie Capital Securities (Singapore) Pte. Limited). The market maker may be the only persons quoting prices forthe Warrants on Bursa Malaysia Securities Berhad. Where past performance is referred to, it is not indicative of future performance.Other than Macquarie Bank Limited ("MBL"), any Macquarie Group entity noted herein is not an authorised deposit-taking institution for the purposes of the Banking Act 1959(Commonwealth of Australia). That entity's obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect ofthe obligations of that entity, unless noted otherwise.The S&P 500 Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Macquarie Capital Securities (Malaysia) Sdn. Bhd(“Macquarie”). Standard & Poor’s , S&P and S&P 500 are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones is a registered trademarkof Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes byMacquarie. Macquarie’s warrants are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make anyrepresentation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.PAGE 4
ionsStructured Warrants in RM1,000RM500RM0Source: Bloomberg, as at 31 May 2020PAGE 5
Structured warrants performanceSource: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 6
Why warrantsGearingLess CapitalExposureto foreignexchangesBull & BearMarketPAGE 7
01What are structuredwarrants?STRICTLY CONFIDENTIAL
Types of structured warrantsCall Warrant (C)Put Warrant (H) Right to buy at a fixed price Right to sell at a fixed price Bullish view Bearish view Increase in value if theshare goes Increase in value if theshare goes Eg VS-C28 Eg FBMKLCI-HAIPAGE 9
Structured warrant vs Company warrantStock Short NameIssued byPrimary useTenureExpiry SettlementMarket makerStructured warrantCompany warrantHARTA-C43 / HSI-HAVGPACKET-WBThird-party financial entityThe underlying companyInvestment toolCapital raising tool for companyUsually 6 to 12 monthsTypically 2 to 5 yearsCash or physical settlementPhysical settlementYesNoPAGE 10
Index / ETF warrantsIndexS&P 500 Index Hang Seng IndexETFFBM KLCI IndexiShares A50Chin ETFPAGE 11
02Understanding key warrantindicatorsSTRICTLY CONFIDENTIAL
Exercise Price The price at which investor can buy (calls) or sell (puts) the underlying shareor index at expiry. Intrinsic value Current underlying price – Exercise priceRM0.10Time ValueRM1.20Current underlying priceRM0.30Warrant PriceRM0.20Intrinsic ValueRM1.00Exercise priceAssuming an exercise ratio of 1:1PAGE 13
Moneyness Exercise price is also used to determine the moneyness of a warrant. Call warrant is: In-the-money (ITM) if current underlying price exercise price. At-the-money (ATM) if current underlying price exercise price. Out-the-money (OTM) if current underlying price exercise price.Source: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 14
Last trading day The last day investors are allowed to buy or sell the warrant. Falls on the 2nd trading day prior to the expiry date.Source: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 15
Effective GearingExample: Warrant X has an effective gearing of 8x1% change in shareapprox. 8% change in warrantHigher effective gearingBigger movement in the warrantHigher profit potential but higher riskPAGE 16
Warrant sensitivity Shows investors how much the underlying share or index mustmove for a corresponding one tick movement in the warrant. Example: There are 2 Call Warrants (A and B) with BursaMalaysia shares as the underlying. The price of Call Warrant Amoves up by 1 tick as Bursa Malaysia’s share price moves up by 6ticks whereas the price of Call Warrant B moves up by 1 tick asBursa Malaysia’s share price moves up by 2 ticks. Which warrantis more sensitive?Answer is Call Warrant B.PAGE 17
View all key indicatorsWarrant TermsSource: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 18
Warrant price vs Underlying priceINARI-C61 (016661)Source: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 19
03Selecting a warrantSTRICTLY CONFIDENTIAL
Selecting a warrant4 simple steps1. Take a viewon underlyingmarkets2. Set trading 3. Effective gearingtime frameThe right risk andreturn balance4. Liquidity ofthe warrantPAGE 21
Bullish or bearish view on underlyingTechnical Event Lookup by RecogniaSource: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 22
Warrant expiry guidelineTrading ProfileWarrant expiry to chooseDay tradingAs short as the same monthShort-term (up to 2 weeks)3 to 6 monthsLonger term (more than 2 weeks)More than 6 monthsPAGE 23
What is warrant liquidity? Provided by the market maker/issuer. Parameters used to measure warrant liquidity?1. High bid and ask volume.2. Tight spread between best bid and best offer warrant price.Source: BloombergPast performance is not indicative of future performance.PAGE 24
Sold out warrants – What does it mean? Inventory sold out when inventory level is less than a certain threshold. E.g.Total issuance size is 40mil units, warrant may be placed in the sold out listwhen issuer’s inventory level is lower than 8mil units. How to determine whether a warrant is sold out?1. The market bid/ask price is higher than the fair bid price onMacquarie’s Live Matrix.2. The market price movement of the warrant does not fully reflectthe price changes in the underlying share/index.Source: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 25
04Useful warranttrading toolsSTRICTLY CONFIDENTIAL
Malaysiawarrants.com.mySource: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 27
Warrant SearchStep 1Step 2Step 3Step 4Source: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 28
Live Matrix – Trade with confidenceINARI 3.5%INARI-C61 10.3%3Sell4Buy21Source: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 29
Live Matrix – Sold out warrantsSource: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 30
Warrants Calculator123Source: Malaysiawarrants.com.myPast performance is not indicative of future performance.PAGE 31
Telegram channel - Macquarie Warrants MalaysiaPAGE 32
Facebook Page - @MalaysiaWarrantsPAGE 33
Contact us for warrant mattersCall ourwarrants deskE-mail usWarrants hotline03 2059 8840info@malaysiawarrants.com.myPAGE 34
MCSM is the market maker for the Warrants (acting through Macquarie Capital Securities (Singapore) Pte. Limited). The market maker may be the only persons quoting prices for the Warrants on Bursa Malaysia Securities Berhad. Where past performance is referred to,
