The FTSE Rebalancing Equals Last Minute Pump Myth
This article tells the public that Friday’s massive pump or last-minute buying, was due to the rebalancing of FTSE indices, in particular. FTSE Global Equity, All-World and the All-Cap index, which took effect on March 15. Added to these indices were JG Summit, San Miguel Corporation, and San Miguel Food and Beverage. The FTSE Global Equity Index included Globe Telecoms.
First, March 15’s gigantic pump…
The PSYEi entered the floating 5-minute intervention phase DOWN by .34%. When the runoff bell rang, BOOM, the PSYEi closed Friday up by .62%! The PhiSYx catapulted by an astounding 74.55 points or by .97%! Such a pump may not be largest, but surely it is a significant one. (charts above from technistock.net and colfinancials)
The 6-minute pump signified a RESCUE. The headline index is not allowed to fall!
Chart patterns? Deliberate pumps craft these.
Record Highs? These are products of a series of orchestrated pumps.
Three of the SY owned companies were part of the syndicated bidding. SM (+3.15%) and SM Prime (+1.9%) were among the biggest. SM was stunningly down by 2.18% when it closed up by .97% by magic. The rescue included Ayala’s BPI (+2.95%). BPI closed the day up by 1.66%.
Metrobank (+1.53%), ALI (+.9%) and TEL (+2.15%) had also been inflated. Had JG Summit -1.8%, AEV -1.97% and SECB -1.97% not been DUMPED, these pumps would have generated a record! BDO was pumped by a modest .5%
These coordinated pumps had the Sy Group as main beneficiaries!
The Philippines is the only equity market in the world with massive tails at the close!
The PSE has GATED PhiSYx Distribution Data
The Philippine Stock Exchange (PSE) has gated the data on market cap float and the % share of component members to the PSYEi. The explanation? For one to gain access to the fundamental information on the index, an annual fee of Php 15,000 is required!
The PSYEi index, sold to the public as “the market”, has been walled as proprietary, bundled with the other more complex data!
So the distribution share of the headline index has been withdrawn from public scrutiny. Why? Because these organized pumpings continue to reveal the massive build-up in concentration risks?
Constructing a portfolio predicated on the market weight share distribution by investors cannot be done, unless one pays Php 15K! Such limits the public’s investing options!
And the public has also become blind to how periodical changes in prices shift the weighing scale of component members of the headline index.
Keep the public blind, so the odds of generating positive returns decreases!
Great marketing by the PSE!
The Myth of FTSE Rebalancing Driving Prices
Back to the FTSE index rebalancing.
The FTSE announced adjustments on several of their benchmarks last February 15. That’s a ONE month window for changes.
But JG Summit was down 1.08% on Friday and -8.8% over the week. JG Summit was down 2.8% from the date of the announcement. Hardly positive signs of “rebalancing”.
Trillion pesos San Miguel was +.06% for the week, +1.28% on Friday from another rescue. Really, buying at significantly higher prices represent a wiser move? SMC has been up 6.54% since the announcement. So the benefit from FTSE rebalancing applied to SMC, but barely from this week’s actions
The FTSE equals last-minute buying has signified nothing more than reasoning from changes.
The media select, they interpret, they emotionalize and they create facts. The media not only reduce reality by lowering information density. They focus reality by accumulating information where ‘actually’ none exists. A typical stock market report looks like this: Stock X increased because… Index Y crashed due to… Prices Z continue to rise after… Most of these explanations are post-hoc rationalizations. An artificial logic is created, based on a simplistic understanding of the markets, which implies that there are simple explanations for most price movements; that price movements follow rules which then lead to systematic patterns; and of course that the news disseminated by the media decisively contribute to the emergence of price movements.
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