HANG Seng Index futures traded at a steep discount to the cash market yesterday as traders looked ahead to an almost certain rise in US interest rates next Tuesday. Total volume was low, with only 7,143 contracts worth $3.33 billion traded. The spot contract closed the day 37 points lower at 9,325 while December contract finished 40 points down at 9,338. The spot index futures opened at 9,325 and continued to fall as selling pressure, mainly from the larger houses, pushed the market down to 9,305 where it stayed for most of the morning session. In the afternoon, some Hong Kong and London buying put 20 points back on to the November futures which bounced up the 9,360 level in late trading before closing the day at a 42-point discount to the cash market. Jardine Fleming said the November to December roll-over spread was quoted at plus 10 to 15 points which was well below the fair value of plus 21 points. Options trading was more bullish, with overseas buyers taking December 10,400 calls while territory investors bought November 9,400 calls. Options volume was heavy at 3,572 contracts representing 50 per cent of futures volume. Open interest was 32,026.
