Good chance for window-dressing push on STI

IN THE near term (that is, this week) the main issue will be whether the Straits Times Index will enjoy a window-dressing push in the few days that remain of 2014. The index has now risen for seven consecutive sessions, a performance mirrored on Wall Street where the Dow Jones Industrial Average has also gained for seven straight days, setting four all-time high records along the way.

If there is a late rush upwards here, it will invariably involve the banks, Keppel Corp, Jardine stocks and SingTel, these being the main components whose movements have propelled the STI either higher or lower at any given time for most of this year.

In our view, the chances of this occuring are good, since the index's rise for the year so far is just under 6 per cent, poor by any standard and even worse given that there was zero gain for 2013. Moreover, the absence of much activity and liquidity in the local market suggests that shifting the index up would be comparatively simple and inexpensive for most underperforming funds. If it's easy to do, then why not do it?