Index-linked put warrants hit limit up as broader market falls

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KUALA LUMPUR (Feb 9): Bursa Malaysia-listed Hang Seng Index-linked put warrants hit limit up on demand for these securities as a hedge against broader market losses. Malaysian shares headed south today with Asian equities after US stocks fell some 4% overnight amid higher US bond yield and US interest rate hike concerns.

At Bursa Malaysia, HSI-H2Y added 30 sen to settle at 93.5 sen at 12:30pm while HSI-H2V rose 29.5 sen to 41.5 sen.

Both warrants settled at their highest level so far today.

Kenanga Investment Bank Bhd analyst Lawrence Yeo told that investors were caught by surprise by the intensified market volatility, so they bought put warrants to hedge against their falling portfolio. "We could see some warning sign of market volatility since last week, but it really has been intensified this week. So investors went to put warrants because of the shock factor," Yeo said.

In the broader market, the FBM KLCI fell 15.86 points or 0.9% to settle at 1,823.58 points. The KLCI reached its highest and lowest levels so far today at 1,824.11 and 1,806.25 points respectively.

Across Asia, Japan's Nikkei 225 fell 2.57%. In China, the Shanghai Stock Exchange Composite dropped 4.1% while Hong Kong's Hang Seng was 3.33% lower. Reuters reported that Asian stocks fell on Friday, with Chinese shares slipping to multi-month lows after Wall Street shares dropped again in the face of rapidly-rising bond yields, while perceived havens such as the yen and Swiss franc were in demand.