Stock splitting

kianhon · Newbie Joined: 08 Jun 2008 Posts: 3

I know this is a silly question to someone, but i'm a amateur and curious. At 1997, after the Asia stock market crash, Genting Bhd (Kuala Lumpur Stock Exchange) splits his stock 5:1. What possible reason for him to do that?

efficiency · Posted: Sun Jun 15, 2008 7:35 pm Post subject:

Merchandising tool. Provides the illusion of getting something for nothing. In this instance, goody goody gumdrops, we're getting 4 more shares for every 1 we know own!!!!

Same pie. Just more slices.

In the long run, it also fragments ownership further. Has implications for voting/directors/maintaining majority control, etc.

In the case of high priced shares, it makes each more affordable. Joe Sixpack often insists on round lots. He wants 100 shares of a $40 stock not 50 shares of an $80 stock nor a measely 25 shares of a $160 stock and wouldn't even consider 13 (rounded) shares of a $320 stock.

Prior to the 1920's splits were has rare as a lunar eclispe and...........REVERSE splits have parallels with a padded bra.

To retierate, a merchandising tool. When pre-announced with great fanfare, it's to bring bugs to the porchlight.