Online technology has
made new issues more accessible to the private investor
but they are still a game for institutional investors.
If you plan on getting involved, be selective over what
you buy and when, and do not hold back from selling.
Dynamic Rules
-
It is best to buy
and sell new issues in a bull market.
-
New issues are
priced according to demand and not necessarily with
reference to fundamental value. It can be outside
the indicative range.
-
Institutional investors
usually receive priority allocation of shares in
a new issue.
-
It is often best
to flip new issues, which is to sell the shares
allocated to you in early secondary market trading.
-
If the issue price
seems too high, put off your buying decision until
the stock is trading in the secondary market.
-
In researching
a new issue, consult at least analysts’ output
and the press. Watch the grey market price if there
is one because it can have a disproportionate effect
on investors.
-
To play safe, go
for new issues on the Main Market of the London
Stock Exchange rather than the junior markets or
abroad.
-
Do not assume that
you will profit from a new issue simply because
it is backed by top-name banks or venture capitalists.
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