HANG Seng Index futures saw a volume of 24,692 contracts yesterday as the January contract slumped 250 points to 7,370. The dive below 7,500 is an extremely negative signal to technical analysts, indicating it could be curtains for the index over the next month of so, with 6,000 to 6,500 in sight. The February contract fell by a similar margin to 7,650 on 18 contracts. March was off by the same margin to 7,550 on six contracts. Total volume in index options was 3,102 lots. Activity was in selling January 7,800 and 8,200 calls. In addition, according to W I Carr, 7,900 calls and 7,700 puts were traded. January's implied volatility jumped to 36 per cent. In February it was 32 per cent up until June. Factors affecting market sentiment were the poor sale at Laguna City and rumours of China paramount leader Deng Xiaoping's failing health. Dealers said although the market was overdue for a consolidation, as it was heavily oversold, sentiment was so bearish there was no sign of any let-up in the slide. Capital markets in Europe and the Americas also looked shaky, making analysts and investors look to caution in their recommendations and investment strategies.
