Talking About ICON (5255): ICON OFFSHORE BHD
ICON went limit up for the wrong reasons. Some are saying its because the terms were so convoluted and that not many know how to calculate the capital reduction.
PLEASE, this is not your first rodeo, this is not the first capital reduction exercise. You are all supposed to be professional investors or advisors.
The limit up was obviously caused by the 50 into one capital reduction. A simple calculation showed that ICON had 2.377bn shares. Divide that by 50 = 47.5 million shares. That must be close to the fewest number of shares listed by a company on Bursa.
The complaining parties ARE those who SOLD SHORT unwittingly. Imagine you had 100,000 prior to the ex date. It was trading at 4 sen, you value was RM4,000, and as with 99.9999% of ICON investors, you had lost money already big time.
Then you woke up and saw the price going limit up.
(0.035 x 50) + (100 × 0.105) ÷ 101 = 0.12
Add the 30 sen limit up, you have 42 sen, today add another 30 sen you have 72 sen.
As you can see even at 72 sen, with just 47.5m shares its market cap is just RM34.2m. Of course, there are still other derivatives to cater to but let's forget that for now.
The main reason for the double limit up... OVERSOLD SHORT. Imagine that same guy with 100,000 shares (value RM4,000) and seeing it going limit up at 42 sen. Sell first lar... Trouble is he sold 100,000 consolidated shares when in reality he had only 100,000/50 = 2,000 shares.
Imagine you have to buy back the 98,000 ... say at an average of 62 sen ... you would have lost 62-42 = 20 sen x 98,000 =RM19,600
Bearing in mind your value was just RM4,000 to start with. The figures will multiply if you had shorted 1,000,000 ...
Bursa has done no wrong. This has been the same process for the longest time. Even our online accounts have default settings that do not allow investors to short sell stocks, i.e. selling what you don't have in your portfolio.
The ONLY people who can short sell are DAY TRADERS or proprietary traders or company dealers... though some bigshots do deal through company dealers' accounts first. Hence if you kena short sell... you get very little sympathy from all.
http://malaysiafinance.blogspot.com/2020/01/talking-about-icon.html
