what is right issues (RI) ? it is not the right to issue newspaper. In stock, RI is the right to issue additional number of shares based on current available shares. In other words, if a company want to increase its capital, they can issue additional stocks by allowing the shareholders to exercise some right for new shares. For example right 3:5 means shareholders should hold 5 shares in order to issue 3 new shares. Holder might hold until passing certain date such as 31 may, then they must provide additional funds to exercise the new shares.
The price of new shares was decided by the company if the right issues is at Rp 1,000, and holders keep the stock until 31 may, then tomorrow they will get the right to issue new shares. The right can be traded normally within 1 week, if after the end of trading price the right is only value at Rp 200 then shareholders should add additional Rp800 for one share.
In stock market, company which hold the RI corporate action, will boost the current shares price before the RI, and after the RI the stock value will drop as the shares becomes more. Suggestion is buy 1 week before RI and sell at the 1 day before RI. Happy trading ... Will I AM Chen...
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