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PETALING JAYA: Trading interest in bottom-line stocks in Bursa Malaysia remained high as trading volume reached the seven billion mark, with rubber glove counters keeping the focus of traders.
While the breadth of the market for the FBM KLCI was negative, medical glove and concept game stocks underpinned the market as news of increased demand for lead-time gloves fueled buying momentum.
Shares in Bursa Malaysia made history on Wednesday when their trading volume rose to a record 9.59 billion shares, valued at around RM5.1bil. Yesterday, the value of the traded shares was slightly above RM4bil, as the FBM KLCI closed 0.12 points to 1,397.25.
There were 616 decliners, 345 winners, and 327 counters unchanged.
The focus on rubber glove manufacturers did not wane as those companies were now reported to require deposits when orders are taken. The waiting time for delivery is nine to 12 months.
In addition, the rally at the glove companies is also taking place outside of Malaysia.
Riverstone Holdings Ltd, a Malaysian rubber glove maker listed on the Singapore Stock Exchange, has seen its share price rise 160% from a recent low of S $ 72.5 cents. The focus is now focused on publicly traded companies that will benefit from the Covid-19 pandemic. As a result, many companies have launched into the industry to capitalize on demand related to the Covid-19 pandemic.
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CGS-CIMB Securities Sdn Bhd’s head of retail research, Kong Seh Siang, sees a red flag ahead for Bursa’s prospects.
He noted that the breadth of the market was negative despite a “bullish day.”
“Even in a bull market, an unprecedented surge in trading volume generally serves as a warning.
“A purchase climax perhaps. In today’s environment, it could be a big red flag, ”he said.
Kong said the increase in volume could indicate that market participants, who were on the fence earlier, have jumped on the market.
An investment bank sees differently and feels that the increase in volume is a positive sign of investor confidence returning to the capital markets.
“The stock markets have digested the defeated stocks and are looking towards a recovery, hence the disconnect between capital markets and the state of the economy,” he said.
He noted that renewed interest is also evident in the number of new problems to be launched in the next quarter. “You are seeing a positive response even though the MCO is still in place,” he said.
A distributor noted that retailers were not buying.
In fact, they took advantage of high prices to sell drug-related stocks.
“The glove sector was being supported by day operators and proprietary day operators (PDT), which may not actually reflect a healthy market,” he said.
Former investment banker Ian Yoong noted that most institutional funds are on the sidelines as many are invested in the big three rubber glove makers, Hartalega Holdings Bhd
, Top Glove Corp Bhd and Kossan Rubber Industries Bhd.
“No one knows how long this rally will last. But as long as the rubber glove sector grows and the global financial markets remain stable, this recovery could still have legs, “Yoong said.
Another sender added that while short sales are prohibited, the glove sector will continue to lead the purchase of interest in the market.
“Therefore, the upcoming earnings season will be very important in evaluating whether stock valuations are sustainable,” said the sender.
On April 28, the Malaysian Securities Commission (SC) and Bursa extended the temporary suspension of short sales until June 30.
With investors unable to sell short, this makes selling pressure relatively light compared to normal circumstances.
The temporary suspension, which began on March 24, was initially intended to end on April 30.
Meanwhile, after a conference call with 60 fund managers on Tuesday, glove leader Top Glove Corp Bhd was back on the winner list, closing 99th highest in his new record, closing at RM10.30
This was because the current order delivery time was extended from 10 to 11 months (from an average of 30 to 40 days before Covid-19), which is an indicator of the current strong global demand for gloves.
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