KLOFFE'S KLSE CI Futures Weekly Market Commentary

CASH-FUTURES CONVERGED ABOVE 800 LEVEL

MARKET MOVEMENT

The Kuala Lumpur Composite Index June Futures (FKLI) was traded from a low of 794 to a high of 824.5, a different of 20.5 index points. The direction on both cash and futures are mainly caused by the announcement of first quarter GDP figures and cash-futures convergence.

The cash market continued to be supported by investors as they anticipated some good figures to be announced by BNM. Main component stocks like Maybank, AMMB, and UEM helped push the cash index above 800 level after three days of testing this psychological level.

In the futures market, rollover activities dominated the five day trading as June futures is near expiration. The basis between cash index and futures index narrowed to only 5.67 index points from 25 index points a week ago. Sell spread (Sell June futures and Buy July futures) seen dominating the futures market in which that might indicate that uptrend still intact.

This is the basis risk that FKLI investors need to understand as trading futures is NOT only monitoring the cash index and component stock for direction, futures players need to understand the specification of that particular contract. It is mentioned in previous week's commentary.

For June futures, it closed at 811.9 and July closed 838.9. Intermonth spread widened.

To recap, total contracts traded for the week were 9,360 contracts, an daily average of 1,872 contracts.The 20-day volatility stayed below 30% level. Total month end open interest stayed above 4,400 contracts.

MARKET OUTLOOK

The market will remain neutral with limited action.The direction of futures market will be based on the anticipation of General Election declaration. Resistance would be at 821, 832 and 844 while support can be seen at 800, 789, 778 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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