By Alvin Foo, Markets Correspondent

THE recent retreat of Hong Kong’s Hang Seng Index is drawing traders into fresh positions for its contracts.

Last Friday, the index plunged 329.05 points to 24,714.07 - down a total of 904.79 points, or 3.53 per cent, for the week.

However, a Societe Generale (SG) warrants report said: ‘Investors’ sentiment has improved, as negative news coming from the United States has abated and some recent news has been fairly positive.’

‘The index has risen by about 4,200 points from its low in mid-March,’ it noted.

Hang Seng contracts were the most active warrants in Singapore last year.

They accounted for $7.89 billion, or 28 per cent, of total warrants turnover.

Investors who are bullish about the Hang Seng could consider an SG call warrant expiring on Sept 29 with a strike level of 25,400 points.

Last Friday, this contract closed three cents down at 61 cents, with 120,000 units done.

In contrast, investors who hold a negative view of the index may consider a put warrant offered by the French bank.

This warrant also expires on Sept 29 and pays out if the index drops below 24,400 points. No trades were done last Friday.

SG has a neutral view of the short-term outlook for the Hang Seng.

Near-term resistance should be found around the 25,341 mark, while support should be seen at 24,253.

The index needs to break above 26,000 points before the technical outlook will turn positive.

This week, the Hang Seng will probably be driven by news of the US economy. Due out is data on new home sales, durable goods sales and consumer performance.

A market expert predicted that the trading range in the coming week would fall between 23,800 and 25,200 points.

A call warrant lets an investor buy into a stock or index at a pre-set price over a period of three to nine months.

A put warrant allows an investor to sell the stock or index at a pre-set price.