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Impact of DRP on share price

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jurn

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> An early bounce has faded as Asian markets remain weak and the market has been hit by selling related to margin calls, dividend reinvestment plans on Westpac and ANZ, and expectations of share market selling when the ban on shorting non-financials is lifted Wednesday.

> He added that ANZ and Westpac continue to be restrained by selling related to their dividend reinvestment plans.

taken from from DJ news wires.

Can someone explain why a DRP would cause selling?
I understand there will be more shares issued, so if you don't participate your holding will be diluted.. but isn't this is already priced in?

thanks,
Jurn
 
jurn said:
> An early bounce has faded as Asian markets remain weak and the market has been hit by selling related to margin calls, dividend reinvestment plans on Westpac and ANZ, and expectations of share market selling when the ban on shorting non-financials is lifted Wednesday.

> He added that ANZ and Westpac continue to be restrained by selling related to their dividend reinvestment plans.

taken from from DJ news wires.

Can someone explain why a DRP would cause selling?
I understand there will be more shares issued, so if you don't participate your holding will be diluted.. but isn't this is already priced in?

thanks,
Jurn
Click to expand...

Think you will find it is the DRP under writer, UBS, who is selling down some of 75m shares it has picked up due to under subscription to the DRP. Have a look through the ASX-announcements re the DRP.
 
jurn said:
> An early bounce has faded as Asian markets remain weak and the market has been hit by selling related to margin calls, dividend reinvestment plans on Westpac and ANZ, and expectations of share market selling when the ban on shorting non-financials is lifted Wednesday.

> He added that ANZ and Westpac continue to be restrained by selling related to their dividend reinvestment plans.

taken from from DJ news wires.

Can someone explain why a DRP would cause selling?
I understand there will be more shares issued, so if you don't participate your holding will be diluted.. but isn't this is already priced in?

thanks,
Jurn
Click to expand...

Because these companies are so stupid and don't realize the world is going into a recession. Its unwise to payout profits to investors when your earnings are down, and are going to continue to be down.

I think they are keeping the DRP in place because it makes the company look rosey, ("oh look at this company, even though there is a recession on.. this company is such a good company that it can afford to payout $ to investors")

:2twocents
 
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