Window dressing on STI – 30 March 2012

Yesterday’s trade was the last day of March 2012. For most funds that report quarterly results, the first quarter of 2012 ending 31 March was important. Their funds will be priced according to the share prices as of end of yesterday. The higher the share prices, the better the portfolio value. Window dressing has been an old trick that is as relevant today. Funds may pay higher prices for share trades as end of the quarter in the hope to prop the value of these shares before it closed.

Take the case of the Straits Times Index (STI) as of yesterday. (See the one-day STI graph attached.)

STI closed at 2,994.09 points the day before (29 March). It climbed to peak at 3,012.12 at about 10 am in the morning (30 March). But after that, it declined throughout the day and touched the base of 2,998.80 at about 4.30 pm. For the next half hour, it started to climb sharply to settle at 3,010.46 points. This is an increase of 0.55% over the previous day closing.

I cannot see any other reasons for the last half hour exuberance. The stock markets that closed earlier or at the same time zone such as Nikkei (-0.31%), Australia (-0.06%), Kospi (-0.02%) and Hang Seng (-0.26%) were in negative territory. Perhaps, investors on the Singapore market see something that the other Australia-Asia market players did not?

Copyright © 2012, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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