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::::: Share Market Investors Club @ EK :::::
- Thread starter argan
- Start date
Overpricing IPOs – face the music
By Duruthu Edirimuni Chandrasekera
Despite all the Initial Public Offerings (IPO) issued so far being oversubscribed, the lesson for the IPO issuer companies is not that they shouldn’t do a Private Placement (PP) at a price below the IPO price, but that IPOs should not be overpriced, analysts say.
"The Private Placements below IPO price is fine provided that you have a strategic reason for doing so. Those who invested in Softlogic a year ago took a bigger risk, one that paid off quite well for them. However, you can’t always take the public for a ride by overpricing the IPOs. Most of the recent IPOs were way above 15 times earnings which is a very rich multiple. Early post-war IPOs left something on the table for IPO investors. Now there is none,” an analyst said.
He added that those who bought at the recent IPOs bought them knowing well that there was an overhang of PP investors who had bought the share at below the IPO price. Many analysts say that the ambitious IPO launching companies should be aware that when they issue shares at a multiple of the fairly recently concluded PP prices they will invariably have to face the music.
"The lesson that investors should learn from this is to understand that IPOs are not easy money," Deshan Pushparajah, Head of Capital Markets Capital Alliance said, adding that one needs to do an appraisal prior to investing, same as when investing in the secondary market.
The dismal performance of the Colombo bourse continued as more force selling, panic selling and profit taking caused selling pressure across the board during the past month with analysts saying that both the market indices were pushed further into the red as the highly capitalized banking and diversified sectors suffered heavy losses during this time.
All the money in the market has got held up in IPOs and the public have found that IPOs are a quick way to make a buck. There is a sudden block in cash in the market and the day the IPO shares start trading everyone starts selling to earn short term profts. “As such all recent IPOs have been oversubscribed and on day one of trading there are many sellers trying to get the money back into the market. This results in the market giving negative signals,” another analyst explained.
Shanilka De Silva Research Analyst NWS Holdings noted that force selling seen during the past weeks was a signal from broker firms which needed to comply with the government’s new regulation to have debtors limited to broker firms' share capital. “Therefore brokers were also force selling to reduce debtor balances and giving negative signals to the market,” he added.
http://www.sundaytimes.lk/110724/BusinessTimes/bt35.html
By Duruthu Edirimuni Chandrasekera
Despite all the Initial Public Offerings (IPO) issued so far being oversubscribed, the lesson for the IPO issuer companies is not that they shouldn’t do a Private Placement (PP) at a price below the IPO price, but that IPOs should not be overpriced, analysts say.
"The Private Placements below IPO price is fine provided that you have a strategic reason for doing so. Those who invested in Softlogic a year ago took a bigger risk, one that paid off quite well for them. However, you can’t always take the public for a ride by overpricing the IPOs. Most of the recent IPOs were way above 15 times earnings which is a very rich multiple. Early post-war IPOs left something on the table for IPO investors. Now there is none,” an analyst said.
He added that those who bought at the recent IPOs bought them knowing well that there was an overhang of PP investors who had bought the share at below the IPO price. Many analysts say that the ambitious IPO launching companies should be aware that when they issue shares at a multiple of the fairly recently concluded PP prices they will invariably have to face the music.
"The lesson that investors should learn from this is to understand that IPOs are not easy money," Deshan Pushparajah, Head of Capital Markets Capital Alliance said, adding that one needs to do an appraisal prior to investing, same as when investing in the secondary market.
The dismal performance of the Colombo bourse continued as more force selling, panic selling and profit taking caused selling pressure across the board during the past month with analysts saying that both the market indices were pushed further into the red as the highly capitalized banking and diversified sectors suffered heavy losses during this time.
All the money in the market has got held up in IPOs and the public have found that IPOs are a quick way to make a buck. There is a sudden block in cash in the market and the day the IPO shares start trading everyone starts selling to earn short term profts. “As such all recent IPOs have been oversubscribed and on day one of trading there are many sellers trying to get the money back into the market. This results in the market giving negative signals,” another analyst explained.
Shanilka De Silva Research Analyst NWS Holdings noted that force selling seen during the past weeks was a signal from broker firms which needed to comply with the government’s new regulation to have debtors limited to broker firms' share capital. “Therefore brokers were also force selling to reduce debtor balances and giving negative signals to the market,” he added.
http://www.sundaytimes.lk/110724/BusinessTimes/bt35.html
Asia Securities aka cdax softwares aka free denanawada.....
thank .. thank u very much ....
godak dewal balapanawa e atharama manipulation n romur mathath shares up wenawa bt ewa tika dawasai e wagema onama hoda share 1k unath 1 digatama up wenne naas an example rs 50 ta thiyena share 1k rs 200 k watinawa unath eka eka digatama 500 ta yanne na ewa ganath poddak danan ina one profit taking nisath intrest 1 adu weema nisa.mkt condition nisa . buying resistant mind nisa ehma wena.
micro facts n macro facts widiyta reason divide krna puluwan.
micro environment facts
company n industry
financial performance
expansion
acquisitions mergers n takeovers
industry growth rate
new business ventures
competiton in the industry
intrest of a big investor like dp when big investor dumps shares it mgt go dwn
pending announcements in regard to dividend
seasonal affect of the industry-in hotel prices goes up whn tourist arrivals peak on season.
macro facts
is business f d company z socially accepted o some rnt happy just like nuclear power plant.
government attitude towards d business of d company.lets say gonna strat pvt uni thr will be intencives.
global economy facts n globl prices sply of tea n rubber sply 4 exporting companies
political stability.
wage hikes
even environment on agri n plantation
there might b few other facts which i missed also.some of these will not make price double o gong dwn by half impact on price will vary
Happy Trading
CDAX nam denawada danne na....poddak call ekak deela balauwanam hari...habai machan DFN eken godak dewal karanna puluwan tikak advance unata max software eka...
Machn.....Account Summery eke thiyana me dewal pehedili karala denna puluwanda??
Buying Power
OD Limit
Margin
Blocked Amount
Unsettled Sales
Cash Available for Withdrawal
Buying Power
OD Limit
Margin
Blocked Amount
Unsettled Sales
Cash Available for Withdrawal
Machn...Mama Ahahala thiyana Scene 1 meter nedda.???
meka gana mata wadiya danna aya innawa machan....a aya kiyai kiyala mama hithuwe....kawruwath thaama kiyala deela naa wage neda...inna mama ape gigee ta kiyannam.
August 15 to 19 watch these Stock
GREG.N
GREG.W0003
BLUE.X
BLUE.N
TWOD.N
This is just a watch list for the coming weeks
GREG.N
GREG.W0003
BLUE.X
BLUE.N
TWOD.N
This is just a watch list for the coming weeks
Its all News and Knowledge my friend
REEF brought CLND share per 31 for 40 mill Rs (as i remember) sometime back as short term investment so we all knew REEF will go up when CLND go up, thats why yesterday from 2.15 to 2.30 pm REEF price jump from 70.20 to 75, today 80+
If reef Dump there CLDN shares they get the capital 40 mill + 40 mill Profit so as long as CLND fly REEF will follow
(thats a small example but keep your eye on Greg w3 and w6 cus it might shoot up, BTW this is not a buy recommendation)
