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Sri Lanka Equity Forum » Stock Market & Forum Help » SUB–DIVISION OF SHARES

SUB–DIVISION OF SHARES

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1 SUB–DIVISION OF SHARES on Tue May 10, 2011 8:03 am

ssuni

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Manager - Equity Analytics
Manager - Equity Analytics
is that a loss for investor?

2 Re: SUB–DIVISION OF SHARES on Tue May 10, 2011 8:12 am

Slstock

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Director - Equity Analytics
Director - Equity Analytics
@ssuni wrote:is that a loss for investor?


Ex : X company share is Rs 100
10:1 subdividions announced.
After subdivision there will be 10 times shares than before with trading vaolue Rs 10.

There is no loss per say but after sub division of the share, if it trades less than Rs 10 then ofcourse there is the natural loss as with any other share.

One thing to note. WHen an illquid share gets spilt in a bear market it can go down ( it has happened to LOLC,SPEN,MAL etc for a while before it can go up. In a bull market it can go up. Depends on timing.

Also note the extra liquidity ( more sharesin the market ) can go either way. If the original share was overvalued before split then chances are that the price can even reduce when it comes to market and when there are more share to trade.


3 Re: SUB–DIVISION OF SHARES on Tue May 10, 2011 9:22 am

xhora

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Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Too much liquidity from Subdivisions can make stocks stagnate for a long periods of time. We have seen that from RICH.

4 Re: SUB–DIVISION OF SHARES on Tue May 10, 2011 9:56 am

ssuni

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Manager - Equity Analytics
Manager - Equity Analytics
@slstock wrote:


Ex : X company share is Rs 100
10:1 subdividions announced.
After subdivision there will be 10 times shares than before with trading vaolue Rs 10.


One thing to note. WHen an illquid share gets spilt in a bear market it can go down ( it has happened to LOLC,SPEN,MAL etc for a while before it can go up. In a bull market it can go up. Depends on timing.


is that only depend on time??

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