KLOFFE'S KLSE CI Futures Weekly Market Commentary

QUIET JULY FUTURES SEEKING FOR DIRECTIONS!

MARKET MOVEMENT

The Kuala Lumpur Composite Index Futures (FKLI) was traded from a high of 908.5 to a low of 881, a different of 27.5 index points. The lack of direction in the futures market are mainly caused by the huge premiums compared with cash market and less willingness to trade futures when second board market is making a rally.

The cash market consolidated as investors started to take profit ahead of any uncertainties. Second, third liners and second board stocks remained the focus of investors.

On the heavy capitalised stocks, Maybank, UEM and Tenaga continued to be supported by investors while Telekom was underweighted by investors on rumor of management fight and resignation of CEO.

In the futures market, lack of directions and high premium compared to cash index were the cause of quiet trading in both July and August contracts. At the close on Friday, July futures narrowed to only 35 index points compared to 50 index points a week ago.

For July futures, it settled at 886.1 and August futures settled at 907.0

To recap, total contracts traded for the week were 7,363 contracts, an daily average of 1,473 contracts.The 20-day volatility stayed at 30% level. Total month end open interest stayed above 5,000 contracts.

MARKET OUTLOOK

Although long term bullish view still in tact, the market will be neutral to bearish when consolidation takes place. The direction of futures market will be based on the adaptation of stock market's high volume stocks which may trigger force sell pressure. Premium of 35 points in July futures might be narrowed down to comfort zone if long players decide to lock in their profits in quiet futures trading and arbitraguers might want to take advantage of this high premium with time running out. Resistance would be at 900, 919 and 947 while support can be seen at 837, 864, 875 levels.

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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