The cash market continued to be supported by investors as they reacted to the good trade figure and window dressing activities on first 2 days of the week. The cash index continued to surge after the hiccup close on Wednesday and rally to 845 level on Friday based on the UEM/Telekom proposal.

In the futures market, rollover activities dominated the first two days of   trading as June futures expires. The basis converged to just 6 points premium. However, when UEM and Telekom was suspended on Wednesday, futures traders anticipated this as some good news to be announced which see July futures surging to 895.0 on Friday. This is a 50 point premium compared to cash index as they factored in the huge weightage of both stocks on composite index.

Now, assume that Telekom surge RM1.00  and UEM up RM1.00 on Monday, the cash index can rush up 12/13 index points based on just this two stocks. And if futures index is trading at a premium of 50 index points, the actual premium would be about 35-40 index points. Therefore, I would assume that futures are price accordingly and efficiently (The futures index is leading the cash index of one trading day!) and in tandem with cash index:- An uptrend still intact!

For July futures, it settled at 896.0, and August futures settled at 914.0

To recap,  total contracts traded for the week were 8,650 contracts, an daily average of 1,730 contracts.The 20-day volatility stayed at 30% level. Total month end open interest stayed above 4,000 contracts.