KLOFFE'S KLSE CI Futures Weekly Market Commentary

MARKET MOVEMENT

The Kuala Lumpur Composite Index Futures (FKLI) was traded from a high of 754.0 to a low of 668.5, a difference of 85.5 index points. The week started off on positive sentiment when the government made a move to liberalize telecommunication sector in Malaysia by allowing foreign investors to hold up to 49% of equity ownership from the previous 30% limit. The March futures contract stabled at the 730s level.

However, the market turned sour during the mid week when Sime Bank was reported a net loss of RM 1.57 billion and needed to recapitalize at least RM 1.2 billion. The futures contract open sharply lower for the past 3 days, in the discounted region which one time was as wide as 27 points discount compared to the cash market. The healthy 700 level support few days ago was broken and on Thursday, the futures closed at 670.0, the lowest since February 18, 1998.

The position of IMF on postponing the next installment in the aid package for Indonesia sent regional currencies plunging when Indonesia rupiah and Malaysia ringgit touched 12000 and 4.04 level respectively. Both the cash and futures market ended nervously at 690.36 and 681.6, a discount of 8.76 points.

To recap, total contracts traded for the week were 11,811 contracts, an daily average of 2,362 contracts. Total open interest stayed above 11,000 level.

MARKET OUTLOOK

Next week, focus are mainly concentrated on Sime Darby's news conference to be held on March 7 and Indonesian election on March 11. Both events will not only affect the equity and currency market, but it will also affect investors' confidence in the region market.

For March futures, resistance would be at 689, 696, and 712 while support can be seen at 663, 677, 684 levels. I expect the market outlook to be neutral to bearish.

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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