One way to buy stocks when they are still cheap is to Buying shares when newly acquired Initial public offering (IPO)However, buying IPO shares is quite risky. The reason for this is that we are not confident that the share price will go up when it goes on the market. In fact, IPO share prices actually drop infrequently on the first day.
to overcome this First you need to know about the requirements. Accompanying the IPO process, these three terms are: book making, offering, and allocation. What’s that? book making, offering, and allocation And how will these three terms affect stock prices in the future? Check out the following comments:
Understanding Book Creation
Book Creation is a series of steps to price stocks based on the price or value of requests submitted by investors interested in purchasing an instrument. Therefore, the instrument’s price at this stage generally remains in the price range.
by page geektonight.comThe process of preparing this book includes setting up a professional team for IPO, compiling documents to the Indonesian Stock Exchange to conduct on-site auctions. e-IPOs. Once on the e-IPO page, interested parties can fill out a request and the price they want.
The prices from these investors are then compiled and combined and used to determine the share price by a team of designated experts. This account creation process indirectly measures market interest in the instrument.
The higher the aggregate value of the price entered by the investor. Interest in the stock and its price will also increase. The process of creating this book is taking place on the e-IPO.co.id page so it can be done transparently. The process of bidding and collecting prices on the e-IPO page takes about 7 to 21 days.
In addition to measuring investor interest in the stocks offered, The bookkeeping process also helps companies indirectly determine the true value of the instruments they issue. and do stock market Due to the issued shares in the e-IPO, investors who previously had an account on the website will be notified.
Definition of Offering
After the team of experts has finished calculating the final price value. It’s time to issue shares to the public. The process of issuing shares to the public for the first time is called the offering period. This phase takes approximately 1-5 business days.
During this offer period Stocks can be traded freely. Because short-term traders can buy stocks at this time. It is therefore not surprising that the price volatility of these instruments is quite high at this time. Therefore, it is not advisable for new investors to buy stocks that are still in this period.
Definition of Allocation
The number of requests investors enter in the bookkeeping process is infrequently greater than the number of shares sold by the issuer. to overcome this Issuers go through a process known as allocation or allocation so that all or most of the investors who participate in the auction during bookkeeping are allocated.
However, there are times when investors don’t get their share. This may be caused by factors such as
- Stock ratio between institutional investors and retail investorsIn general, institutional investors tend to earn a larger share compared to retail investors. Usually the ratio of the allocation between Institutional and Retail Investors is 90/10, which can be caused by a number of factors such as capital, partnership, etc. However, field implementations may differ.
- media marketingCompanies that the media extensively cover the IPO process are often oversubscribed. or the number of orders is greater than the number of available shares As a result, the chances for investors to acquire these stocks are getting smaller. not only that Oversubscribed stocks also tend to decline. Especially if overbooking is caused by orders from short-term traders.
- Offer typeAlthough institutional investors generally receive a larger share than retail, But there are some industries that focus on individual investors. Therefore, if companies from that industry issue shares They will focus on acquiring investments from these types of investors.
- Share allocations with company partners.. Retail investors also have the potential to earn a small amount of stock. This is because the issuing company caters to large institutional or retail investors who have worked with the company for some time.
- Investor relations with securities companies. In addition to being a company that provides services to investors who invest in stocks (Broker-dealer) Securities companies can also be underwriters (insurer) in cooperation with the issuer Your chances of getting a share from an issuer will be greater if you have been using the company’s services for a long time. insurer card issuer
On the other hand, the chances of getting allocated shares are less. If you intend to create a securities account at a securities company to receive shares from issuers working with these securities
If you participated in the auction but did not receive your share during the allocation process The company will reimburse you, so instead of deliberately entering a large share request in the bookkeeping process to show a high interest in owning the shares. You should enter a stock name request as needed.
Because if it turns out that the shares are oversubscribed or the company cares about other investors. The number of shares you will receive will be less than you would like. Or you won’t get any shares at all.
That’s the discussion of the bookkeeping, offering and allocation conditions in the IPO process. Don’t forget if you are interested in buying new stocks that will be released on the stock exchange. Please check the prospectus first. The goal is for you to know where the proceeds from the IPO process will be used and what the future business potential of the company will be.
Again, buying IPO stocks is risky. Because you don’t know the real value of the stock. The number of short-term traders who play stocks and do not know how companies will manage their investors’ funds. In addition to understanding the above requirements Remember to buy these types of stocks with caution.