HSBC Rights Issue

Repromancer

Hi Guys, I didn't know where to post this but here it goes:

I have a few shares with HSBC and they have offered me to buy more shares at a discounted price to what it is currently valued in the market.

Does this mean I can buy this shares at a discounted price, and sell them a few days later at the normal market price?

I dont get it. Its confusing.

Is there a minimum time i need to keep these shares?

Many Thanks for your help!

sabretoothtigger

It would be more then a few days I think, maybe like a week or so later you could sell. Yes in a way it could be a nice earner or you can just sell the rights to someone else so they can take the risk for you

Repromancer

Are you 100% sure?

Does anyone else who has had a request from HSBC to buy their shares know what can be with done with these shares after you buy them?

sabretoothtigger

If you want 100% sure you could pay an IFA to advise you how to best manage Hsbc shares
I dont own these shares

Lokolo

Surely it will say in the info you got?

timarr

Sadly there are no free lunches on the stockmarket.

Basically the bank is issuing new shares to raise money. So at the moment you will have your old shares and some "nil paid rights". These are a right to subscribe for new shares at 254p each. If you pay the 254p you get your new shares which are no different from the old ones and which you can then sell at whatever the share price is. If you don't you can sell the rights in the marketplace for whatever they're currently trading at. Normally if you don't make a decision the bank will sell them for you and send you the money.

However this is not "free money". The value of your old shares will have dropped to compensate so that even if you sell the new shares you'll probably still be worse off.

The decision on whether to take up your rights or not should be based on whether you think HSBC is a good investment or not going forward. It's nothing to do with getting cheap shares that you can sell for a profit - the losses on your existing shares won't compensate for any profits you make in the short term.

You should have been sent documentation relating to this, but otherwise go look at the HSBC website. The new shares start trading in early April so there's not long before the rights convert into cash or new shares.

timarr