MAS is in the midst of completing a 1-for-1 Rights Issue at RM1.60 each. The ex-date of the Rights Issue was Feb 8, but the share price began to weaken ever since the Rights Issue was first announced on Dec 22. In early January, I had posted that MAS has broken the psychological RM3.00 level as well as the horizontal support of RM2.90 (go here).

Today is the start of trading of MAS-OR, the Rights entitlement. An investor who buys 1000 MAS-OR would be entitled to subscribe for 1000 MAS shares at RM1.60 each. We have seen heavy selling of MAS-OR in the market, prompted by existing shareholders' decision not to apply for their allotted entitlement under the Rights Issue. This may present an attractive opportunity for arbitraging profit for the existing shareholders, who can sell their shares in MAS at the present price of RM1.92 and then acquire back the same share via MAS-OR (presently trading at RM0.14 each) & then subscribing for the Rights Issue share at an all-in cost of RM1.74. Those who want to gain entry into MAS, may choose the cheaper route of buying the MAS-OR & then subscribing for the Rights Issue share, instead of buying the share directly from the market.

Chartwise, we can see that MAS has broken below its recent uptrend line,S1-S1 at RM2.40 and is hanging stubbornly at the horizontal support at RM1.90-2.00.


Chart: MAS's monthly chart as at Feb 10, 2010 (Source: Tradesignum)