stock subscription process and strategy analysis taiwan ipo investment guide

What is stock subscription?

Stock subscription refers to the process where investors submit purchase applications through brokerage platforms during a company’s Initial Public Offering (IPO). If the subscription is successful, investors can purchase shares at the issue price. This mechanism is commonly found in the markets of Taiwan, the United States, and Hong Kong, and serves as a primary means for investing in quality new stocks.

Brief Description of the Subscription Process

Investors must first open a securities account and prepare sufficient funds, as well as understand the prospectus and price range. During the subscription period, they should enter the subscription quantity in the broker’s system, complete the registration, and wait for the lottery. Those who win the lottery will have their funds deducted and receive the shares, while those who do not win will get their reserved funds returned.

Common subscription methods

This includes a lottery system (random drawing for general investors), auction bidding (investors’ bids determine the winning probability), inquiry circle purchase (for institutions only), and direct subscription (fixed pricing allocation). Each method has slightly different target audiences and operational processes.

Subscription Advantages

The subscription price is usually lower than the market price on the first day of listing, and there are no trading fees and securities transaction tax during the subscription phase, making it low-threshold and limited risk, allowing small investors to easily enter the market. Funds not successfully subscribed will be fully refunded, effectively avoiding unnecessary losses.

Risks and Precautions

The risks that investors need to carefully assess include the risk of newly issued stocks breaking their offering price, the inability to flexibly adjust during the fund freezing period, intense competition for popular new stocks leading to a low allotment rate, and insufficient transparency of information about newly created stocks.

Secrets to Improve Winning Rate

Investors can utilize multiple brokers to diversify their subscriptions, increase the number of shares subscribed, lock in under-the-radar but promising stocks, and rely on brokers’ allocation points and activity levels to gain higher priority, thereby increasing the chances of successful subscriptions.

Summary

Stock subscription is an investment approach based on rationality and strategy, where reasonable diversification and maintaining information sensitivity are key to success. With the advancement of blockchain technology driving innovation in traditional finance, stock subscription may integrate with the Web3 ecosystem in the future, opening up new investment horizons.