KLOFFE'S KLSE CI Futures Weekly Market Commentary

MARKET MOVEMENT

The futures market was quiet for the last 4 trading days. Window dressing activites took place for the last three trading days which shot up the cash market. However, profit taking actively hold the cash and futures market to close lower on the first trading day of year 1998. Recent pressure by Bank Negara on merging finance companies has helped a lot of finance stocks to recover the long drought in the year. However, the gains were quickly eaten up when investors were not confident on the earnings of finance stocks. Higher cost of funds and shrinking loan base are hurting future earnings of the finance stocks which hold down investor's confident with thin trades.

The Malaysian Ringgit dropped to a record intraday low of 3.9755 which made the futures stayed at discount.

This week is consider holiday week for futures trader when weekly volume was barely 4,572 contracts. The 20-day annualized volatility was down to less than 70% from 75% on December 26, 1997.On the price movement, the 3 day gains were matched by a single day lost on Friday. The spot month futures closed at 560, down 6.9 index points from last Friday's 566.9 The premium basis of 6 points last week turned bitter to a discount of 12 points.

MARKET OUTLOOK

Continue selling would be the picture next week as investors are concerned about our weakening ringgit that dropped to record low on Friday. Until there is a clear signal on
(1)Healthy merge of finance companies.
(2)Stronger Ringgit
to be seen, overall sentiment would remain bearish.

January contract is expected to be volatile again and should be in the range of 535 and 600. Volume and open interest are expected to pick up from a sluggish week as volatility pick up.

DISCLAIMER
The weekly market commentary has been compiled by Shu, Meng Chan (article writer) for private views only. The weekly market commentary articles are being released for the interest of Shu, Meng Chan only and should not be considered investment advice. There is no warranty or representation expressed or implied by Shu, Meng Chan as to the the accuracy or completeness of the commentary herein. The content of the articles will not reflect the general view point of the described (KLOFFE)Futures Exchange. Shu, Meng Chan will not be liable for any action taken by viewers upon reading Shu's Corner KLOFFE's Weekly Market Commentary.

(mshu@tm.net.my)
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