Of course, the capital increase is a movement that is closely linked to equities. To the point that you will surely have come more than once. Because in effect, it is a strategy that is used very frequently by listed companies to get liquidity to meet your business needs. Both in the large values of the Spanish stock market, as well as in those of medium and small capitalization. In this sense, there are practically no different at the time of initiating a capital increase.
In addition, this business movement has gained special relevance due to its impact on the Banco Santander. Well, this very important fact is being developed as part of the financial strategy to acquire Banco Popular. And that is leading to a large part of the small and medium investors being immersed in this process of great importance in the investment. Because you cannot forget that you can also make them profitable.
However, one of the questions that investors ask themselves the most is should they go to the capital increase issued by companies that are listed on the equity markets. Because not in all cases they will be the same results. It will depend on many factors that from now on you will have in this information. So that from now on you know what to do at all times. Because something you should keep in mind is that it will not be an easy decision that you will have to make. Because they are movements in the stock market that have many edges that you should know.
Capital increase: its reason for being
First of all, you cannot forget that it is a resource that listed companies have to boost their business lines. Even to carry out new investments for better exposure in financial markets. It is something that has become normal among all large financial groups. Although its effects are not always the same. Because it can be very positive for the evolution of companies. But the same does not happen in some of the cases, as you can see in recent years.
At the time a capital increase is launched, they are the former shareholders who have a certain preference to go to these remarkable facts. Although also if you are not positioned in the affected value you can also get involved in this kind of operations. Because you will also make them profitable within a few months from their issuance. Which is the objective pursued with its implementation in the financial markets. Because in fact, in the best scenarios, you can earn a lot in these very special and traditional operations at the same time.
Objectives of these movements
There is not the slightest doubt that the goal of any saver is to get a few euros from each of the new shares. In any case, do not think that its profitability will be generated a few days after its launch. Because this is not really this way, but the benefits go to longer terms, for example in the medium and long term. If what you want is a more or less rapid return through these operations in equities, you better forget about the capital increase.
Its effects on the price of the securities involved in these processes will begin to be noticed after a few months. Period in which you will have to ask yourself if it is convenient for you to undo the accumulated positions from these movements. To the point that in the most positive cases it is even possible to doubling the price of new shares. Even more aggressive revaluations cannot be ruled out. This is why it is so important that you choose the most competitive capital increase. Because you cannot forget that not all of them are the same, far from it.
Badly received by the markets
Of all, a capital increase is not very received by the financial markets. This is due to the distrust on the part of the most stable investors of this kind of processes in the financial markets. As a consequence of them, it is not surprising that the price of the shares depreciates after a few days. Because there are also many small and medium investors who choose to undo positions. To try not to be immersed in bearish processes that can generate heavy losses. At least when it comes to the longer deadlines.
From this general scenario, it will be highly advisable that you analyze in great detail each of the capital increases that land in the financial markets. But above all, see their conditions and if it is good for you to subscribe them. So that in this way you can make the most correct decision to defend your interests as a retail investor. Where the price at which you must subscribe the new shares will be very important. And if the answer is yes, you will have no choice but to go to it and make the most of it.
First effect: price dilution
One of the main characteristics that derives from these movements in equities is that share prices will fall in the short term. His explanation is very simple and it is because as there are more shares in the financial markets, they are worth less. Not surprisingly, they are trading sessions where prices are adjusted according to the rules of financial movements. In this sense, your investments may suffer and lose their value in the next trading sessions. In a greater or lesser intensity, depending on the capital increase to which you go at any time.
However, and as the days go by, prices tend to adjust to their real price. Of course, once the capital increase has been completed. From this scenario, after a few months you can make profitable operations derived from this notable fact in companies listed on the equity markets. For this precise reason, these are operations that are intended for the medium and long term. For a very well-defined investor profile that is encompasses the most conservative. Where security prevails over other approaches to investing in the stock market.
What goals can you meet?
In all cases, if you go to one of these very special processes in the business world, you can benefit from a series of advantages. That otherwise cannot be generated from the purchase and sale of shares directly in the equity markets. It will be very important that you assume them in case in the coming months you are going to be one of the investors who are going to attend one of the many capital increases that take place every year. Because it is something that is present month after month and year after year. Basically they will be the following premises that we are going to present to you from now on.
- It is a very special strategy by which you can buy shares at lower prices than through traditional systems. Very beneficial for longer terms.
- You can expand your investment in a company. So that in this way, you have from that moment greater number of shares. With which the potential for revaluation of your shares will be increased. Even adjusting them to the profile that you present as a small and medium investor.
- In the cases of companies that distribute dividends to their shareholders, it will involve a technique for charge more money for this remuneration. With a fixed and guaranteed return on savings every year. Regardless of how the shares are traded on the financial markets.
- In some cases it is a way of opening positions in the stock market with heavy discounts with respect to the purchase of shares through the more conventional systems. Although it will be very interesting for you to read the conditions of the capital increase that you are interested in at that time.
- Not only because it is a capital increase, it will have to be a very profitable operation. Because indeed, it could be the opposite and you have some other problem at the time of signing this so common operations in equities.
- For a whole year, you will have several proposals of these characteristics. To the point that it can create more than one doubt that can put you in a serious bind. To avoid these scenarios, you will have no choice but to opt for those operations that offer you the best guarantees. Not doing it could cost you dearly from now on.
- You also can't forget that you must analyze the technical aspect sensitive value of these operations. Because it will not be the same to do it with an upward trend than with another of completely different intensity. And that you can be the factor that determines the success or not of the capital increase. Like other figures that make up its technical aspect.
- Finally, you cannot rule out that these operations will not be very positive, even so that you can lose money in your investment portfolio. For this reason, your decision should be the result of a extensive meditation. Not surprisingly, a lot of money is at stake.