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The rise of index funds has fundamentally altered stock trading dynamics. Research by Prof Jiang Wenxi, Professor of Finance, and Prof Yao Chen, Associate Professor of Finance at CUHK Business School, finds that stocks heavily owned by index funds experience a massive trading surge right before the market close.🕟 This shift creates a highly liquid environment but raises concerns about market transparency. 📌Reduce tracking error: Index fund managers trade near the bell⏰ to align with indices calculated using closing prices. 📌Liquidity vs. noise: The rush provides cost-effective trading but creates “noise” that can mask actual company performance. 📌Strategic camouflage: Short sellers time their trades during this window to hide their transactions and avoid moving prices. Read the full article: https://shorturl.at/gIe9A Follow us for more #ChinaBusinessKnowledge #CUHKBusinessSchool #LookForward #CUHKResearch #ChinaBusinessKnowledge #BusinessEducation #IndexFunds #StockTrading #Investment