Definition of overhang market
The overhang of the market has a number of contexts within Finance. Both of the common uses to attract customers or investors in anticipation of future events before they buy.
In the context of business, existing on market or market overhang occurs when a leader in the field of space products announces they will begin producing product in a new industry. Since the company is already a respected competitor in your industry first, is the announcement that they will enter into a new industry forces people to wait for their products to the market and buys existing products. This waiting period can create pent-up demand.
Overhang the market also can be described observations, the theory that in certain stocks at certain times, there is a buildup of pressure. This is the result of sales and the desire to sell among those who still hold the stock but fear that selling it may cause further decline. Depending on the total liquidity of the stock, the market overhang can last for weeks, months, or longer. Market overhang usually relates to trading in the security, but can also be used for large areas of the market such as the entire sector.
Breaking down the ‘overhang market
Existing in the market at times deliberate step. The act of declaring a new product long before it is implied in the stable procurement of products and create pent-up demand, which will increase with the purchase of a new product finally becomes available.
Market overhang is most often felt and created by institutional investors, which may take a large stake which they want to sell and are known for high sales on the stock market. Another variant occurs when a large shareholder is considered to be looking at selling his or her share. This creates an overhang in the stock, which prevents investors to sell the shares as long as a major shareholder sold its stake. Overhang the market may also develop in inefficient IPO, when the prison term ends and insiders look to unload their newly acquired shares.