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When a company announces a rights issue, the share price often decreases. This is because the new shares are offered at a discounted price, and the market adjusts to reflect the dilution in value.
Since the total number of shares increases but the company’s overall value (market capitalization) remains the same, each share now represents a smaller portion of the company’s value. This reduces the earnings per share (EPS) and can lead to a drop in the share price.
