I recently read Darren Rickard’s thoughts on pre-announcement trading of SKC. It is always difficult to know whether a share-price rise prior to an announcement is due to focus on that particular equity or other sentiment factors, or whether it is due to insider trading. But I too have had my suspicions of insider trading in a number of situations on the NZX.
A few weeks ago a visiting professor in finance, Utpal Bhattacharya from Indiana University, commented about the poor record New Zealand has in investigating and litigating against insider traders. There is a good article on stuff. He makes the point that since passing the insider trading laws 20 years ago, only 4 significant insider trading actions have been taken. Since insider trading is a very profitable venture, I suspect that a lot more of it occurs than has been prosecuted. Especially with people who make relatively minor trades, which is enough to move markets in New Zealand.
For New Zealand to develop a well supported capital market, trust and confidence in the markets are primary elements. I haven’t been able to find any recent event-study into pre-announcement movements. It would be interesting to see if there is any statistical evidence of pre-announcement movements.