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KUALA LUMPUR: Glove makers fell sharply in mid-morning Monday and, being components of the FBM KLCI, dragged the 30-share index into the red.
The sharp drop could be due to the rise of the temporary suspension of regulated short selling (RSS) by the Securities Commission (SC) and Bursa Malaysia Bhd
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Glove companies could therefore be among the targets for short selling activities and most of the 2020 earnings all but disappeared, analysts said.
At 10:22 a.m., the KLCI was down 33.91 points, or 2.08%, to 1,593.30. The turnover was 2.81 billion shares valued at RM2.31bil.
The glove stock sale cast a blanket of pessimism over the broader market, where there were 960 losers, 161 winners and 282 unchanged counters.
Hartalega RM1.66 fell to RM10.48, Top Glove 84 sen to RM5.28, Supermax 62 sen to RM5.39 and Kossan 54 sen to RM3.96.
“The RSS suspension, scheduled to expire on December 31, 2020, will be raised on January 1, 2020, to facilitate investor risk management and reactivate Securities Lending and Lending (SBL) activities, which is an integral role of the capital market to promote product development and market making activities, ”SC and Bursa Malaysia said in a statement on December 16.
Capital market regulators first introduced a temporary suspension of short selling activities on March 24 of last year, just a week after the FBM KLCI fell more than 200 points in the period of March 11-19. March.
StarBiz had reported that glove companies could be among the targets of short selling activities to be allowed again.
Analysts said the sale was overblown as company earnings remained visible for 2021 and 2022 and they expected strong earnings growth.
However, they said short selling could continue through Wednesday before slowing down.
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