SGX Stocks and Warrants
Wilmar preferred over Olam
Warrant traders appeared to be suffering from Monday blues, with daily warrant turnover registering a sluggish $11.4M, the lowest this month. While much of this was attributed to indices in both HK and Singapore trading a narrow range, investors took positions in warrant over stocks with larger moves.
One such stock was Wilmar, which fell for a third consecutive day. The share price first pulled back a day before the company released its fourth quarter 2012 results last Friday morning on February 22. When profits were reported to have fallen on the back of declining palm oil prices, the stock was sold down more, taking losses in three days to 5.3%. Nevertheless, Wilmar is still an outperformer this year, gaining 6% this year versus the STI's 3.8%.
The short term pullback on this outperforming stock may be the reason investors bought WILMAR MB ECW130910 (R5HW, exercise $3.55) for a third day. A total of 700k of this warrant has been bought since Thursday. The warrant has lost 19.6% in the last three days versus the stock's -5.3%.
Fellow commodity play Olam however, saw less confidence from warrant investors who had bought into it after the stock closed unchanged for five consecutive days. 500k of OLAM MB ECW130603 (R3LW, $1.729) was sold back by short-term trader. Warrants can fall in value even with stock prices unchanged as they experience decay on time value as they head closer to expiry date.
Over with the HSI, bullish investors also appear to be losing some steam as they slow down their recent buying spree. A total of 5M HSI calls - 3.5M of March call HSI 23800 MB ECW130327 (RK6W); and 2M of April call HSI 22400 MB ECW130429 (RR7W) were sold back. 1.8M of Friday's most actively traded HSI warrant March put HSI 23200 MB EPW130327 (RK9W) was bought by investors after the warrant fell 8.5% as the March HSI futures rose 0.4%.
Source: Macquarie Research - 26 Feb 2013
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