KUALA LUMPUR (Sept 24): Futures players made huge gains early today by forcing down the key FBM KLCI by about 28 points or 1.7% to a low of 1595.85, senior dealers told theedgemalaysia.com
After 12 minutes of opening bell, the FBM KLCI plunged by about 28 points to 1595.85 points, with big-cap index linked stocks such as SIME DARBY BHD [] and CIMB Group Holding Bhd falling sharply. The index closed at 1623.70 last Friday.
However, the key FM KLCI index has since recouped losses due to buying interest. At noon break, the FBM KLCI ended at 1610.35 points, losing 13.35 points or 0.82% compared to last Friday’s close.
In early trade, the FBM KLCI futures fell to a low of 1,589 points before recovering some losses. At noon break, it ended at 1610 points, down by 7.5 points.
In response to this market talk, Ang Kok Heng, chief investment officer of Philip Capital Ltd, said: “Somebody short the futures and the FBM KLCI index
followed suit. Because the volume was not high, KLCI
rebounded when buyers returned.”
Many of my friEnds who are in future advice don't play in klse because it is too fragile and easily manipulated if you have 500 million funds. Meaning if george soros want it down it will go down
“This sharp plunge has got to do with foreign futures players, as local funds do not play the futures. Moreover, the futures market fell first before the physical market,” he told theedgemalaysia.com.
Dealers said the futures players gained by snapping up index futures when the KLCI was at its low of 1,595 points and selling at higher levels when the KLCI rebounded.
“By creating volatility and wide gap in the futures and physical markets, the futures players make profit,” one explained.
He noted that for Sime Darby, only 1,300 shares were transacted when it was sold down to RM9.62, or a loss of 17 sen per share, in early trade at 9.11 am. About the same time, CIMB Group Holdings Bhd lost 20 sen to RM7.33 per share.
“This shows that it cannot be normal investor behaviour,” he said.
Both shares have since recouped losses but are still trading at a loss.
Ang ruled out the sell-down early today as being linked to normal programme selling on physical market, which happen when foreign funds see valuation of stocks hit their target.
The key reason was that the future market fell first before the physical market. “In normal programme selling by funds in the physical market, there is no link with the futures market,” he said.
A bank-linked dealer said such activity is normally linked to big funds. He said: “Only big boys play the futures market and can control the market. Once in a while, you see them shorting the futures or doing hedging. The legitimate explanation for today’s sharp fall is linked to futures sell-down to make profit.”