DERIVATIVES activity remained relatively quiet for the third day running as the January Hang Seng Index futures run out of time and volatility remains high in March and June.
The strong overnight buying of Hong Kong stocks in London took the January futures to an 11,600 high for the day.
After the initial surge, strong overseas institutional selling led by some of the US investment banks, including Morgan Stanley and Salomon Brothers, depressed the index. Despite some buying support the banks kept selling all day, market watchers reported.
Rumours put out from Morgan Stanley indicated that money from two Japanese funds managed by Yamaichi and Daiwa would not be coming, as plans to invest through the funds had been postponed. This apparently depressed sentiment.
At Jardine Fleming, Vivian Ting said: ''Much of the trading activity was concentrated in the January contract.'' January futures remained at a discount for most of the day, closing at 11,110, down 230 points and a discount of 154 points to the cash index.
Heavy dumping of the contract continued after the cash market stopped trading.