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GameStop phenomenon spreads to Malaysian glove stocks
Shares of the US video game shop chain surged from less than $20 to a peak of $492 earlier this week, after millions of amateur investors active on online forum Reddit rallied together to punish short sellers by sending prices soaring.
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The GameStop logo sign is seen above the store in Culver City, California on January 28, 2021. An epic battle is unfolding on Wall Street, with a cast of characters clashing over the fate of GameStop, a struggling chain of video game retail stores. The conflict has sent GameStop on a stomach-churning ride with amateur investors taking on the financial establishment in the mindset of the Occupy Wall Street movement launched a decade ago. (Agence France Presse/Chris Delmas)
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alaysian retail investors joined forces on social media and pushed up stocks of under-pressure rubber glove makers on Friday, taking inspiration from the recent GameStop trading phenomenon in the US.
Shares of the US video game shop chain surged from less than $20 to a peak of $492 earlier this week, after millions of amateur investors active on online forum Reddit rallied together to punish short sellers by sending prices soaring.
In short-selling, investors borrow stock, sell it and then buy it back at a lower price, keeping the difference. But if a stock unexpectedly soars, then investors are forced to buy it back at a loss.
Inspired by the US movement, Malaysian mom-and-pop investors Thursday set up their own Reddit group, naming it BursaBets after the country's stock exchange.
Like the US group WallStreetBets, BursaBets became an online rallying spot for those urging people to buy and hold shares, in this case, targeting glove stocks.
Malaysia is the world's top producer of latex gloves, and major producers saw their shares jump last year on strong demand due to the coronavirus pandemic.
But the companies were hammered in recent weeks as vaccines became available and they were targeted by short sellers, after the government lifted a ban on the practice.
Top Glove, the world's biggest maker of rubber gloves, saw its stock soar almost 300 percent last year, but later fall by about 40 percent.
The day after the BursaBets group was set up, its stock rose over eight percent on the Kuala Lumpur stock exchange.
Rival companies also notched up strong gains -- Hartalega put on over five percent, and Supermax was up 3.6 percent. Hartalega Holdings Bhd opened sharply higher at RM13.42 versus RM12.20 on Wednesday, coming off a mid afternoon peak of RM13.42 to end the morning session at RM12.86, gaining 66 sen or 5.41 per cent, news website Malaymail.com reported.
Supermax Corp Bhd gained 16 sen or 2.44 per cent in the same period. The stock surged to a high of RM7.16 from RM6.56 before the break.
"I believe the current price of gloves are very undervalued, and my personal stance is that I want to hold on to it until it gets to its fair value," said "_Revenant_", the founder of BursaBets which has over 6,800 members.
"I just want the market to realise that the valuations are too low and that our glove companies deserve better."
