Gocap Stocks: Definition, Characteristics, Trading Strategies, and Risks

Some time ago, BUMI's stock, which had been "sleeping for a long time" at the price level of Rp. 50, finally rose again. This is quite a stir considering that BUMI has been stagnant for more than two years at its lowest level.

However, with the private placement plan to pay debts, many are starting to worry whether BUMI will return to the gocap stock gang or not.

What is gocap stock, really? For those of you who are curious about trading strategies and risks, let's look at the understanding first so that their understanding is more stable.

What is Gocap Stock?

Gocap shares are shares that have the lowest price determined by the Indonesia Stock Exchange (IDX), which is IDR 50 per share. Now this provision applies to stocks on the development board and the main board of the stock exchange. You can check the list of stocks listed on these two types of boards on the idx.co.id official website in the Market Data menu.

Even though it sounds scary, gocap stocks can still rise again. All stocks can move to any price depending on the sentiment or positive factors that will push the stock. So if there is an improvement in several indicators that cause the stock to drop to Rp50, it is possible that the price will rise again.

For example, BUMI's shares managed to get out of the Rp50 level thanks to revenue that increased by thousands of percent.

Causes of Gocap's Stock Price

There are many factors that cause stock prices to fall to their lowest levels. Examples such as fundamental factors which in terms of performance, profitability, and so on experienced a prolonged decline. So that investors who initially owned shares there saw that the company was no longer prospective and decided to sell their share ownership.

Then the management who stumbled into a legal case was also another reason behind gocap shares. Why? The problem is that the company will lose investor confidence considering that the case has damaged the good image it has so far. And as soon as there is selling pressure, the share price goes down.

Not only that, the factors driving stocks to enter the level of Rp50 are actually very diverse. One thing that is certain is that these factors tend to be negative for the company's performance.

Gocap Stock Example

To better understand, we can look at the Jiwasraya corruption case in 2019. Well, some of the figures who stumbled upon this case used to be quite famous in the stock market realm. Therefore, market participants no longer believe in the shares owned by these figures. For example, MYRX and TRAM, whose share prices have fallen, are the impact of sentiment on the Jiwasraya corruption case.

Gocap Stock Features

One of the anticipatory steps to avoid gocap stocks is to recognize their characteristics. Does a stock have the potential to become a gocap stock or not?

First, in terms of good corporate governance and fundamentals to determine the company's performance. If good corporate governance and fundamentals are bad, then the stock has great potential to become a gocap stock.

Second, look at stocks that are indicated by UMA or unusual market activity. UMA indicates problems in certain stocks. This condition can lead to the possibility of a suspension which will certainly be very detrimental to investors.

If the shares you own show these characteristics, you should secure your capital first. Because basically the trading mechanism is driven by supply and demand. So when investors don't trust the company anymore, of course, selling pressure will be high and supply will automatically increase. When the supply increases, the stock price will fall.

Gocap Stock Trading Strategy and Risk

Stock trading will not be separated from the so-called analysis. Try to analyze the gocap stock you want to buy again, is there a potential for a reversal or a reversal to go up? Or is there a turnaround story such as improvements from the fundamental side or certain cases that previously occurred and other negative things.

If there is no improvement or positive sentiment that can push the stock price, it will be very risky to enter Gocap stocks. The point is to know the company first. Starting from the business model, good corporate governance, to the management. If you are sure of the company's potential, then you can consider watching it first.

But keep in mind, gocap stocks are high risk. Traders and investors must be prepared to face risks if it turns out that the stock is still "sleeping" aka hard to move. Even if there is a sentiment that we think is positive, the market does not necessarily think it is positive. It can even be delisted if it stays at level 50 for too long. So again, you have to be more careful when trading in gocap stocks.

Interested in learning stocks so that maximum profit? Or can you trade signals in real-time? All you can get on Emtrade! Upgrade to become a VIP member to enjoy all Emtrade features.

By becoming a VIP member, you can enjoy trading signals, stock references, educational content, analysis, research reports, intensive stock questions and answers, morning and day briefings, and regular seminars every weekend.

Each stock discussed is a case study, education, and not a buy and sell order. Trading and investing in stocks carries risks that are your personal responsibility. Emtrade is not responsible for any risks that may arise.