Error in KLCI computation August 15, 2007Posted by elizabethwong in Economy, Huh?!, Malaysia, Note2Self.
Error in KLCI computation
Wednesday, 15 August 2007
KUALA LUMPUR: An error in the calculation of the Kuala Lumpur Composite Index (KLCI) on Monday resulted in the 100-stock index closing at 1,296.48 instead of 1,287.59, causing some confusion among stockbrokers and investors.
Due to the error on Monday, the KLCI was shown to have closed up 8.78 points, when it should been down 0.11 of a point.
When the market opened for trading yesterday, it opened at 1,288.48, down eight points when it should have been higher by 0.89 of a point.
At midday, the erroneous data showed that the KLCI fell 6.24 points to 1,290.24 when it should have reflected a 2.65-point increase. The error was only rectified during the midday break.
The Edge Financial Daily learnt that Bursa officials had met the Securities Commission over the error.
An institutional dealer with a local brokerage called The Edge Financial Daily to complain about the error in the KLCI computation and confusion among his clients.
However, some dealers and remisiers said they were unaware of the “miscalculaton” because they did not expect such an error as such data including the indices and prices were directly transmitted from Bursa.
KLCI futures traders said there was not much impact on their trading activities because of the already wide gap between the cash market and the futures.
The KLCI futures opened weaker at 1,262, which was seven points lower than Monday’s closing of 1,269.
Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff said yesterday the error that occurred on Monday resulted from adjustments made to one of the constitutents arising from a complex corporate exercise.
“As part of our efforts to protect market integrity, the exchange regularly monitors all its indices to detect any possible errors or anomalies.
“In this instance, we detected the error this morning. Following our investigations, the error was rectified by lunch time and trading participants were duly informed before the start of the trading session,” he said in a statement in the evening.
In an earlier statement, Bursa Malaysia said the miscalculation arose from adjustments that were made to the index computation.
“This resulted in an incorrect closing value of 1,296.48 reflected for the KLCI as the end of yesterday’s (Monday) trading. The exchange had now adjusted the KLCI closing for Monday to its correct value of 1,287.59,” it added.
It is believed that the error could be related to IOI Corporation Bhd’s corporate exercise in which it reduced its share capital after a capital repayment. The miscalcuation could have occurred involving the computation of the weightage for IOI Corp.
IOI Corp shares have been suspended since last Thursday for the capital repayment to shareholders via a cash distribution. theadgedaily.com