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Time to rescue system from stags

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THE latest row that has exploded among banks over the mayhem caused by new equity issues in Hong Kong is just one more symptom of the problems that plague flotations.

Time after time the whole banking system has creaked under the sheer weight of money that has surged through it in search of instant profits from flotations.

Small wonder, given the number of times that over-subscriptions have run into three figures and first-day dealings have seen handsome premiums.

It looks like easy money, and all it takes to get it is more money.

A grim example of just how much cash is marshalled to support the stags came earlier this week with the result of the Legend Holdings issue.

Oversubscribed 400 times, and with a single punter applying for 11 times the total amount of available stock, it summed up the chaos that regularly infects the initial public offering market.

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