Readings: FII outflows, IPO grey-market premia
- Business Standard: India funds most hit in credit crisis: Citigroup
India-focussed funds have seen the biggest outflow at $262 million in the Asia-Pacific region during the past couple of weeks, even as net redemption from all offshore Asian funds was low, compared to the equity market meltdown earlier in March this year and May-June 2006.
The current market fall has caught investors by surprise and they are yet to react, Citigroup analyst Elaine Chu wrote in a research note. “We would not be surprised to see more redemptions when Asian markets rebound in response to the Fed’s discount rate cut last Friday”.
- Economic Times: Falling grey market premium spells bad news
A look at the latest grey market premium of some of these IPOs reveals that the premium has declined sharply.
Experts said while pricing an issue, usually 20-25% listing gains are left for investors. However, when markets fall, this premium shrinks, with many a stock losing its sheen, thereby making it unattractive.
There is a large pipeline of issues slated to hit the market in the coming months. If the global markets continue to slide further, the issues that have already closed for subscription could see a decline in premium.
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