DWINDLING turnover in the cash and futures market dominated brokers' minds last week as they feared Government efforts to curb market manipulation had succeeded in expelling long-term investors as well. Turnover in the cash market fell every day last week except for Friday, when a global sell-off drove the market sharply lower and there were signs that the Government had re-entered the market. Brokers' fears that the clamp down on short-selling and the strict enforcement of the T+2 settlement deadline in the cash market, along with higher margins in the futures market, had shaken the confidence of investors, who have already been burned on their Malaysian holdings because of the introduction of strict capital controls. Fimat Futures equity derivatives trader Karim Kabbabe said: '[Futures investors] don't want to stay because there is no solid ground here anymore.' Arbitrageurs have been seen winding back their exposure to the futures and cash markets in part because of an unavailability of stock to short-sell but also because of fears they might be caught out by further regulatory changes. In the futures market, turnover bottomed at 16,248 contracts, a far cry from daily turnovers of more than 60,000 contracts ahead of the expiry of the August contract. Brokers said the giant hedge funds that had dominated the equity and money markets in the past few months had closed the majority of their positions. The Futures Exchange board had warned that Government measures aimed at reducing volatility in the futures market and increasing transparency would crucify turnover. But by the end of the week it was in support of the measures. The Hang Seng Index rose 90.01 points over the week, peaking on Tuesday on timid buying. On Monday, shares had surged on massive short-covering by hedge funds and hopes that Government measures to curb speculation would meet some success. Brokers said that on the previous Friday, US investment banks had recalled a huge amount of stock previously lent to short-sellers, forcing short-covering en masse on the next trading day. A firming yen and softer local interest rates encouraged the closing of positions, they said. Critics of the Government's new measures said selling pressure during the week could have been stronger if not for confusion over the commitment of the Stock Exchange of Hong Kong to enforce paper-work requirements for short-selling and an unwillingness to attract regulatory attention.