We had the Market Insights and Profiting From Corporate Actions workshop yesterday.
It was a full house!
During this workshop, Guang Sheng shared his insights and views of the current market.
Guang Sheng shared how funds and companies can influence prices based on his game theory experience.
The attendees had these questions answered:
- How would all the recent developments in the market such as trade tariffs, oil prices and property cooling measures play out?
- Where should one invest then?
- Why is it important to understand how corporate actions affect stock prices
- What each corporate action means and how to react in the right way
- Which stocks you should not touch include
- Which stocks are in play now
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But first, what exactly is a corporate action? And why does it matter?
According to Investopedia,
A corporate action is any activity that brings material change to an organization and impacts its stakeholders, including shareholders, both common and preferred, as well as bondholders.
Photo: Hyflux AGM
Corporate actions includes:
- Stock Split and reverse split (consolidation)
- Dividend Payouts
- Mergers and Acquisitions
- Bonus Issue
- Rights Issue
- Share buybacks
Corporate actions are important source of indicators for the retail investors to monitor the company’s direction and effectively, the share price. There are some rules that investors and traders have to take note of, according to Li Guang Sheng (a top tier remisier and veteran community member):
- Officers and employees of the Company two weeks before the announcement of the Company’s financial results for the first three quarters and one month prior to the announcement of the full year results (“Black-out Period”). Usually there will be internal memo to notify and remind all Directors, officers and employees of the Company on compliance with the best practices on dealing in securities pursuant to Listing Rule 1207(19)(c), in not dealing with the Company’s securities during the Black-out Period. The Company, its Directors and officers should be aware that the Company should not deal in its own securities (including undertaking any share repurchases) during the Black-out Period. Therefore, the Company would wish to complied with the Listing Rule 1207(19)(c) and not run foul with SGX.
- If the players of the company shares belong to insiders, then during this period there may be less buyers and harder for you to run or sell your shares. Also if the company is undergoing share buyback and supporting the share prices through daily share buy back, the price may tank during the 2 weeks of no buying from the company or 4 weeks if it is the full year listing result period. So for those who trade heavy, be prepared to reduce your position 2 weeks prior to quarter result announcement due to less liquidity.
- Also take note on listed company share buy back rules,
- a) on-market purchases should not exceed 5% above the average closing market prices of the share over the last five market days;
- b) details of purchases to be released to the SGX-ST, if it is non-market purchases, by 9am on the next market day, or, if an off-market acquisition, by 9am on the second market day after the close of acceptance.
Watch this quick video of Guang Sheng where he explains why corporate actions are so important:
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Corporate actions like share consolidation, stock splits, dividends and rights issues happen frequently, and affect the stock prices of the associated companies.
So how can you seize the opportunity and capitalise on these corporate actions to your advantage and make profits?
We’ve just launched this Corporate Action Strategy Alert that tells you when exactly to capitalise on corporate actions when they happen.
That means you can apply this Corporate Action Strategy in any market condition (uptrend, downtrend or sideways).
This subscription is provided by Wealth Coach Academy, where the principal trainer is Li Guang Sheng @li_guang_sheng. He is a familiar face in the investment community and has more than 15 years of experience. Currently a Top Tier Remisier in Singapore, his forte lies in value investing and fundamental analysis. He also spends a considerable amount of time looking for opportunities in SGX companies through their corporate actions. Over the years, he has built a clientele base that includes high net worth individuals, retail investors, hedge funds, listed companies and clan associations. …
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