A stock split happens when a company's stock price is high, which might reduce trading volume and deter some investors. To make the stock more affordable, the company may decide to split it. This doesn't change the shareholder's equity or the company's total market value, but it does increase the number of shares held. Sometimes, a temporary stock code may be used during the split, but it eventually goes back to the original code. Example: Tencent Holdings (00700) split its stock on May 15, 2014, from 1 share to 5 shares. If you held 100 shares, they would be split into 500 shares. The price per share would drop, but your total value would stay the same.
Before the split: 100 shares * HK$120 = 12,000 HKD
After the split: 500 shares * HK$24 = 12,000 HKD
The price dropped to HK$24 per share, making it more accessible for retail investors and increasing market liquidity.
Stock consolidation is the reverse of a stock split. If a stock price is too low, the company might merge several shares into one to raise the price and improve its image. This doesn't change the shareholder's equity or the company's total value, but it reduces the number of shares held.
