Basic concepts of stock subscription and fraud prevention

        Taiwan's stock market has been trading actively recently, and many investors want to take the opportunity to enter the market, but they dare not chase high and buy individual stocks that have already skyrocketed. In fact, it may be worth considering a more affordable option - participating in the lottery for new stock subscriptions. However, it should be noted that not all stock subscriptions can generate profits, and not every stock is suitable for subscription. More importantly, it is important to be wary of the ever-changing fraudulent methods of stock subscription. This issue of 'Finance Column' shares correct stock subscription concepts and anti fraud knowledge.

        1、 Types of Stock Subscription

                Stock subscription "refers to the purchase of new stocks issued by a company, also known as stock lottery, underwriting subscription, or stock market lottery. It can be roughly divided into two types:" new publicly quoted entities issuing new shares "and" publicly quoted entities handling cash capital increase ".

        2、 Basic expenses for subscribing to stocks

        Each time you participate in stock subscription, the securities firm will deduct the "Subscription Processing Fee (NTD20)" and "Winning Notice Mailing Cost Fee (NTD50)" in advance. Among them, the "subscription processing fee" will not be refunded even if the investor is not selected. If they are lucky enough to be selected, in addition to the stock underwriting price, they also need to pay an additional postage fee as a notification cost.

        3、 Before subscribing to stocks, one should do their homework well

        The main reason why companies attract investors to subscribe to stocks at prices lower than the market price is to raise funds and diversify equity. Therefore, before subscribing to stocks, it is recommended to learn more about the company's industry, reputation, related revenue, and the following three key points:

        1. Pay attention to price differences: Generally speaking, selling stocks after winning the lottery will have an average winning rate of 80-90%. However, if the price difference between the subscription price and underwriting price of the stock is too small and the trading volume is too small, it is not recommended to participate in the lottery to avoid being trapped if it cannot be sold at that time.

        2. Reference stock price: To reduce the risk of the market price falling below the subscription price, investors can decide whether to participate in stock subscription on the last day of subscription based on the stock price on that day.

        3. In depth understanding: If the target of the subscription for stocks is DR shares (Depositary Receipts) or TDR shares (Taiwan Depositary Receipts or Second Listing), special attention should be paid, as the aforementioned issuing companies have already been listed overseas and have applied for listing on the Taiwan Stock Exchange. The transparency of their financial statements is usually lower than that of stocks listed only on the Taiwan Stock Exchange. It is not recommended to participate in stock subscription unless one has a good understanding of the company's operations.

        If you need to inquire about the relevant information of new stock public subscription, you can refer to the "Market Announcement>Public Subscription Announcement" on the official website of the Stock Exchange, the "Underwriting Announcement" on the official website of the Securities Dealers Association, or the official websites of various securities firms. The information on winning the lottery can be accessed through the ordering app of the subscribing securities firm (such as Oriental Petrochemical (Taiwan) e-Finger Earn), the official website of the securities firm, or the "Jibao e-Palm Grip" app of the Jibao Clearing House.

        4、 Preventing Stock Subscription Fraud

        Fraudulent methods are complex, diverse, and constantly emerging. Investors should raise their awareness of prevention and establish the following three anti fraud concepts:

        1. Number of shares limit: There is a limit on the number of shares drawn in the stock lottery, and subscribers cannot choose on their own. If the other party claims to be able to subscribe without a limit on the number of shares, promises a high lottery rate, or even "guarantees winning the lottery", it is all fraud.

        2. Deduction time: The deduction will be made on the second trading day after the deadline for stock subscription. Investors must deposit the money into the delivery account before the subscription deadline. If the other party claims that the deduction can be made after winning the lottery, it is considered fraud.

        3. Platform credibility: Stock subscriptions should be processed through legitimate securities firms. If any investment apps with unknown sources provide various guarantees to you, it is considered fraud. It is recommended to use official applications or website trading platforms to avoid downloading unknown apps or clicking on suspicious links to prevent virus implantation.

        In addition, stock subscription should be handled by oneself, avoiding handing over account passwords, personal information, or funds to third parties to prevent illegal use. At the same time, every investment opportunity should be evaluated rationally, and one should not be blinded by potential high returns or believe in promises of high profits. If you have any questions, immediately call the 165 anti fraud hotline or the securities and futures anti fraud consultation hotline (02) 2737-3434 for verification.

        Stock subscription is an investment method with potential returns. Mastering subscription skills and paying attention to relevant matters can effectively improve the chances of winning the lottery and reduce investment risks. Preparation before subscription, diversified subscription, reasonable selection of targets, identification of risks, and prevention of fraud are all key concerns. Finally, maintaining a rational mindset, avoiding blindly chasing hot stocks, and allocating funds reasonably are necessary to ensure the stability of the overall investment portfolio.

        Stock Exchange: https://www.twse.com.tw/zh/announcement/public.htm

        Securities Dealers Association: https://web.twsa.org.tw/edoc2

        Image source: freepik

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