KLOFFE'S KLSE CI Futures Weekly Market Commentary

MARKET MOVEMENT

The Kuala Lumpur Composite Index Futures (FKLI) was traded from a high of 733.5 to a low of 657.5, a different of 76 index points. The week started off lower on regional pressures as Moody's downgraded Japan's currency and debt. On Monday, the March futures contract resided at the 720s level.

The futures market took another hit when news of Wembley Industries go under receivership spread fears of further such highly leveraged companies suffering similar problems.

On Wednesday, the expiration of March futures and quarterly book closing effect helped push the futures below 700 level but late buying helped support the psychological 700 level and close at 703.0

The weakening ringgit and soft companies' quarterly report pushed April futures further on Thursday and Friday as the futures index dropped five day in a row. The April Futures closed at 659.5, which is 7 points discount from underlying KLCI. This is the lowest recorded since February 1998.

To recap, total contracts traded for the week were 15,065 contracts, an daily average of 3,013 contracts. The 20-day volatility shoted up to mid 40% level. Total open interest stayed at 11,000 level.

MARKET OUTLOOK

The market is likely to remain bearish. As an evidence of this weak companies' quarterly report, and the increase in volatility for the underlying and futures market, main movement will be in the market. Technical rebound is expected on Monday or Wednesday.

For March futures, resistance would be at 728, 698, and 679 while support can be seen at 608, 638, 648 levels. I expect the market outlook to be neutral and 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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