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To its credit, the CSRC is dealing with the share overhang.
The Treasury would recoup its investment and any gains above the floor price would go to the share owner.This clever scheme gets around the share overhang problem by dispersing the decision-making to millions of individual owners, who will each individually determine the time and price at which they wish to sell (thus preventing market anticipation of the sale price).
Much of the decline can be attributed to a massive share overhang: the government still owns two-thirds of the equity in the country's 1,287 listed firms, and its periodic attempts to sell, or rumours that it may do so, depress prices.
And institutional investors would still capture unearned profits from the share overhang, as they did in the 1980s when shares in privatised British businesses outperformed their peers.Nick Clegg's alternative, creating a "people's banking system" by giving away shares to all, may or may not be an improvement on the traditional privatisation model.
Merck, he says, still has a $5 to $6 per share overhang due to the uncertainty of future litigation and the potential size of payouts.
He judged that "the pressure will actually worsen as we approach 2009, with the enormous unlocked share overhang becoming disposable in mid-year and the pressure is likely to last until early 2010".
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The Shanghai A-share market has fallen by 17% in the past year, largely because of the state-share overhang.
Some of the eight vectors share the cloning overhang pairs, i.e. each target had to be amplified with five different primer pairs to permit cloning of all vector-insert permutations (constructs summarized in Figure 2).
For investors, the bad news is that large portions of the shares in each company are held by an investor who said he did not intend to buy them, creating a potential overhang of shares whose sale could devastate the share prices.
Lonmin shares have fallen 5% to 163.8p on fears of an overhang of shares on the market, despite Glencore's management saying they did not currently plan to sell the shares they would receive.
"While the analyst day was upbeat, in our view, lack of anticipated 2006 upside potential and market share concerns remain an overhang," wrote analyst Justin Post in a research note Monday.
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