Suspended Stocks: Definition Factors and Sanctions – Suspended Stocks: Definition Factors and Sanctions, Investment is something that today’s society values because of the rewards that may be obtained in the future. This is why so many people want to invest.

If you are one of them, and you are really active in doing so, you are undoubtedly familiar with the term suspended stock. If you’re new to investing, you might not be familiar with this word.

Suspended shares are equities that potential investors should avoid due to a variety of issues. Because of this issue, the Indonesia Stock Exchange temporarily suspended trading in order to avoid anarchy.

What Exactly Are Stocks?

Shares are proof of ownership of a company’s worth and/or proof of equity involvement. Shareholders can also vote. the right to earn dividends based on the number of shares owned

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An entity or individual can claim ownership in a public business by owning shares. In other words, regardless of the amount of shares they own.

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All shareholders have the right to attend the company’s General Meeting of Shareholders (GMS). Individuals can hold business shares by purchasing them in the stock market.

According to the Indonesia Stock Exchange’s (IDX) official website, the capital market is a market for long-term financial assets that may be exchanged, such as mutual funds, equities (stocks), debt securities (bonds), derivative instruments, and other instruments.

The capital market serves as a funding medium for businesses and other entities (such as the government), as well as a means for investment.

activities. As a result, the capital market provides numerous facilities and infrastructure for buying and selling, as well as other connected operations.

Type of stock

According to the Financial Services Authority (OJK) Attitude, equity (shares) on the Indonesia Stock Exchange are classified into nine sectors:

Mining, basic and chemical industries, agriculture, machinery industry, property and building construction, consumer goods industry, finance, infrastructure and transportation, and finally trade in services and investment.

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Shares are split into two forms, ordinary shares/common stock and preferred shares/preferred stock, in addition to sector.

Preferred shares are those whose owners have or receive preference over distributions. of corporate dividends Among these goals is earning a return on capital via asset sharing when the firm is dissolved.

Common stock is the inverse of preferred stock. This is evidence of ownership in a firm that does not have the option of receiving dividends.

What is the difference between Stock Suspension and Stock Suspend?

Stock suspension is an action taken by the stock exchange to temporarily halt stock trading. This suspension is an intervention by the Indonesia Stock Exchange in stock trading to ensure that securities trading is fair, regular, and efficient.

According to Rule Number III-G governing Suspension and Revocation of Exchange Membership Agreements of the Indonesia Stock Exchange, this suspension is a temporary limitation from trading.

on the stock exchange for stock exchange members or those with the authority or obligation to carry out this transaction

The suspension of a firm or issuer whose shares are listed on the stock exchange happens as a result of a request from the member of the stock exchange in question, sanctions imposed by the stock exchange, or an order issued by the financial authorities.

Factors Contributing to Suspended Shares

A variety of factors might lead to an effort to get a suspension from the Indonesia Stock Exchange. Of course, there are items that can affect the Stock Exchange if these shares are traded unfairly. We shall discuss the variables that lead stocks to be suspended in this section.

So that you, as a potential investor or shareholder, may avoid these types of stocks and avoid suffering a significant loss You may also look into stocks that have been suspended or are presently being.

Suspended. This will be really beneficial in locating stocks that may deliver advantages equivalent to what you spend.

1. Occurs Unusual Market Activity (UMA)

Unusual market activity refers to unusual trading activity or stock price swings at a specific moment. According to the Indonesia Stock Exchange, this action has the potential to disrupt fair, orderly, and efficient securities trading.

The level of activity that is more than ordinary might lead equities to undergo unusual market activity. This figure is determined by the number of shares issued.

This usually occurs when the stock is exchanged but neither side has closed it. Another factor that contributes to extraordinary market activity in equities is an abnormally rising stock price.

This is common when fresh shares are issued in an initial public offering. This is possible because the underlying asset’s value is likely to vary dramatically in the future. As a result, many investors take advantage of this momentum to increase their profits.

2. The company’s stock price continues to fluctuate erratically.

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When a company’s stock price undergoes artificial and erratic changes, the Indonesia Stock Exchange has a high probability of suspending the company’s shares.

As a result, the company’s stock cannot be traded on the stock exchange. However, not all firms that exhibit unusual market activity will be suspended from the Indonesia Stock Exchange, as this status may not be associated with the company. That is, the outrageous price will revert to normal.

3. Fry Stock

Fried stock is a stock with bad fundamentals, yet individuals manipulate the price of this stock to earn a profit. This individual will form the view of retail investors in order for them to purchase shares, and as the share price rises, the person will benefit.

This is a significant danger for ordinary investors, particularly rookie investors. Because this one person obtained the greatest price and opted to sell at that price, the stock price may fall and even result in a loss. The following are some of the traits that suggest that the stock you’re looking at is a fried stock.

Author: Irdansyah
I'm a regular contributor to IRDANSYAH commander, and in my business blog, my team and I share tales on the experience of starting a business from zero, how it feels to build a startup, and how to scale-up.

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