Will the prices of initial public offers in Singapore rise in the short run from the day of issue

Abstract

This report observed the price movements of some newly issued stocks in their first three months of trading. The observed prices are compared with the respective offer prices and a conclusion regarding the gains or losses due to the stock's performance is drawn. This report also looks at the points of view of shareholders, employees and the company itself regarding the advantages and disadvantages of going public. In addition, legal requirements to be met by potential listing companies are mentioned. There are various factors that need to be considered by issuers in their choice of underwriters. Also, they need to look into the expenses that will be incurred and into the time involved with the initial issue. The selected underwriter will try to consider as many factors as possible in order to make the IPO a success. Generally, the factors are: 1) the appropriate method to be .used in order to correctly price the IPO, 2) market sentiments, 3) industry prospects, 4) corporate image of the company, 5) quantity of issue, 6) the publicity that is given to the issue, 7) political situation and lastly, 8) the effects of inflation. Samples of the prices of thirty companies from both SES Mainboard and SESDAQ are collected from 1991 to 1993. Data analysis of the prices and a conclusion is drawn from the analysis.