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KUALA LUMPUR (Jan 29): Amid a move by some retail investors to hire institutional short sellers, the Minority Shareholders Watch Group (MSWG) has advised retailers to act diligently and be aware of the risks involved in such initiatives. .
In a statement today, MSWG noted that retail investors are looking to buy stocks in medical glove manufacturers in an attempt to raise their prices and counter short sellers who tend to drive prices down.
“In ‘bursabets’, a new subreddit on the social news aggregator site Reddit, Malaysian retail investors have been discussing buying shares of glove manufacturers. Their problem is that glove company share prices have fallen in recent months despite the growing earnings reported by these companies.
“In short, they are inspired by David’s recent battle against Goliath at the US firm GameStop Corp,” the watchdog group noted.
Shares in GameStop are up 1,700% in just two weeks as Main Street piled high and forced hedge funds like Melvin Capital Management to lose billions on their short positions. These small investors discussed the shares on the “wallstreetbets” forum on Reddit anonymously and have fueled the GameStop rally.
Locally, the participation of glove manufacturers such as Top Glove Corp Bhd and Hartalega Holdings Bhd increased this morning.
Urging minority shareholders to act diligently and be aware of the risks involved, MSWG said: “In general, institutional investors tend to have deeper pockets.
“This is not to underestimate the purchasing power of retailers. At the end of the day, it may become a question of who has the deepest pockets and the stamina to sustain their initiatives,” he said.
MSWG also warned that there may be some unscrupulous retailers, including “stock market gurus”, who may dump their shares after encouraging other retailers to raise share prices.
The Malaysian Securities Commission has consistently warned the public not to deal with unlicensed investment advisers as they could be defrauded or used as part of a market manipulation scheme, he noted.
“Eventually, such action by both parties trying to counter each other will create volatility in share prices and this can be a risk for investors in the short term.”
“As always, minority shareholders should consider this new game in the city and make informed decisions based on their risk appetites,” he added.
Hartalega was the main winner in Bursa Malaysia this afternoon, trading 56 sen or 4.59% higher at RM12.76 at 3.30pm. It was up 10% at RM 13.42 in the morning.
This was followed by Top Glove, which was up 7.89% or 49 sen to RM6.70, having previously risen 14.33% to RM7.10.
Other glove makers were also higher, with Supermax Corp Bhd up 3.66% or 24 sen at RM6.80 and Kossan Rubber Industries Bhd up 3.05% or 13 sen at RM4.39.
Buying interest extended to the smaller glove counters, although there were not many shorting activities on these stocks. Rubberex Corp (M) Bhd was up 1.74% or three sen to RM1.75, Comfort Gloves Bhd was up 1.29% or four sen to RM3.13, and Careplus Group Bhd was up 2.06% or five sen at RM2.48.
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