Could there have been some ‘window dressing’ just before trading closed on the JSE on Tuesday?
Window dressing is when fund managers or institutions manipulate their portfolios – buying shares in good companies by swopping them out for shares in underperforming companies just as trading for the quarter is about to end.
The idea is to show their customers that they are invested in quality shares as a way to distract them from the underperformance in their portfolios.
This is what Sasfin Securities deputy chair David Shapiro hinted at in a tweet just as the market was closing on Tuesday (March 31).
He noted that: “The JSE is surging in the last few minutes of trade ahead of the quarter end. Sasol up 18%, MTN up 17.5%, Absa up 17%, Ned[bank] up 13%. Could it be institutions and fund managers window dressing? Never!! The investment industry is known as a bastion of uprightness, honesty & integrity.”
Shapiro has a point. Mobile operator MTN eventually closed up 19.19% at R48.39, Absa ended up 18.48% at R75, and Nedbank rose about 13% to R82.66.
Even luckless Sasol held onto its gains closing up 17.24% at R36.93.
The argument for window dressing holds most true for Absa, which started the morning at R64.50, rose to R71.24, then went as low as R69 at 2:45pm, before closing up at over R75.
When looked at over the quarter, there is a stronger case for window dressing for MTN. It started the year at R82.49, dropped as low as R29.48 last Monday (March 23), only to make a strong recovery over the last few days.
Absa and MTN were among the most popular with investors yesterday, with MTN seeing over R1.18 billion shares traded in 19 127 deals. For its part, there were over R1.06 billion Absa shares traded in 26 474 deals.