We all know that our, the , is dominated by the big – the , , and a scattering of large . These institutions together account for at least 90% of the trades on the JSE by value. We make up the rest.
Big institutions have huge holdings of mostlyor , and they are usually judged on their annual performance. The fund managers who run these massive portfolios are very aware of the end-of-year values of their largest holdings. They will have to live with and explain their effectiveness in terms of those year-end .
The result of this is usually some “”. Window dressing is the process of ramping up the prices of your key holdings on the last day of trade in the calendar year. On that day – which traditionally ends at 1pm – there are usually very few participants in the market because most of them are on holiday.
So excessivetraded in a particular on that day indicate that some big institution has made a determined effort to ramp up the or hold the price of one of its major investments.
Perhaps the best example of window dressing on the last day of the year took place in Coronation (CML) on 31st December 2014. Coronation had beensteadily for some time and was clearly a big institutional favourite. On the last day of 2014 it traded a surprising 938,673 shares and closed up over 2,5%. The total value of trades was well over R100m – obviously not a result of private investor transactions. Consider the :
Reading between the lines, some big institution, with a massive holding of Coronation, left instructions to push the price up on the last day of trade to make its year-end valuation look better.
Notably, that year-end closing price of R115.16 was the highest price that Coronation ever reached – since then it has beenfor the past six years.
Looking at the last day of trade in 2020 (last Thursday) it is apparent that there may well have been some window dressing in Lewis.
This share traded an unusually large number of shares on the last day (1,212,155) worth over R26m – which is unlikely to have been done by private investors. The longon the indicates that the made a determined effort to push the share lower – but were prevented from doing so by strong and persistent buying.
On any other day of the year the resulting “” would be a very positive indication of a new upward trend emerging – but on old year’s day it was probably just a bit of window dressing.
The Management and Staff of PDSnet wish you a prosperous 2021 !
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