Penny stick

from Wikipedia, the free encyclopedia

As a penny stock refers to shares whose value lies in the local currency below unity. In the euro area , these are stocks with a value of less than EUR 1. In the US, however, the language is used differently, where stocks quoted below USD 5 are considered penny stock .

Due to the often very low trading volume on the stock exchanges , these stocks are often the object of speculators and are highly volatile . When the speculative bubble burst on the Neuer Markt in 2000 and 2001, the number of penny stocks rose sharply. In July 2001, around 40 of the 343 shares traded on the Neuer Markt were quoted just above or below one euro.

Due to stricter delisting rules are penny stocks in the major indices of the German stock exchange ( DAX , MDAX , TecDAX , SDAX only rarely encountered). In 2018, only the share of Steinhoff Holding, which had collapsed massively after accounting irregularities, was listed in the (low) cent range. After being relegated from the MDAX, the company was listed in the SDAX until December 23, 2019 and then left it.

In contrast, there are a very large number of such shares in the unregulated open market . A “listing” in the Open Market costs comparatively little. An issue prospectus does not have to be published, and the publication of annual reports and balance sheets is not mandatory either. The investor protection associated with the Securities Trading Act applies only to a limited extent to penny stocks listed in the Open Market. On the one hand this is convenient for small companies, on the other hand abuse is possible. In the case of penny stocks of foreign issuers in particular, violations of the Market Abuse Regulation are difficult to prove.

Because of their very low trading volume, the low number of shares traded and the lack of transparency, penny stocks have been increasingly misused for stock spam since 2006 .

Web links

Individual evidence

  1. ↑ Steinhoff International Holdings NV | Shareholders Info. Retrieved April 10, 2018 .
  2. ↑ Listing on the Frankfurt Stock Exchange
  3. ^ Result of the regular review for MDAX, SDAX and TecDAX indices on December 4, 2019. In: www.dax-indices.com. STOXX Limited, December 4, 2019, accessed December 16, 2019 .