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KUALA LUMPUR, January 29 – Top Glove’s share price rose 40 sen or a seven percent increase as of noon today, just hours after news broke that retail investors are behind a campaign to shore up shares of the world’s largest manufacturer of medical gloves.
Top Glove Corp Bhd stock in Bursa Malaysia opened this morning at RM7.05, an increase of more than 13 percent from yesterday. It was the highest since the stock price plummeted in late June last year after its factories closed due to the spread of Covid-19 among its largely migrant workforce.
Its total net short sale position was 239.45 million shares, or just 2.9 percent of Top Glove’s paid-up capital as of Jan. 27, Bursa Malaysia trading data showed.
Other local manufacturers of rubber gloves also appeared to be participating in the bursabet rally.
Hartalega Holdings Bhd opened sharply higher at CU13.42 from CU12.20 on Wednesday, breaking off a mid-afternoon high of CU13.42 to end the morning session at CU12.86, gaining 66 sen or 5.41 percent.
Kossan Rubber Industries Bhd saw its share price skyrocket to a high of RM4.59 shortly after the opening bell, an increase of 33 sen or 7.7 percent from the close of RM4.26 on Wednesday. Still, it closed at just RM4.33 or seven sen higher at the midday break.
Supermax Corp Bhd gained 16 sen or 2.44 percent in the same period. The stock rose to a high of RM7.16 from RM6.56 before the Thaipusam breakout.
The rally comes as a number of Malaysians, inspired by the fairytale success of US hobbyist stock traders who helped skyrocket the share price of game retailer GameStop on Wall Street, began “bursabets”.
The local version of the social aggregator Reddit is based on the “wallstreetbets” subreddit group, a collective of presumably stock and option traders now calling for “unity” against “institutions” and “big bucks.” Its founder claims that the market is rigged to suppress the share prices of local glove manufacturers.
Vincent Khoo, a research analyst at UOB Hay Kian, said today’s price movement may have been fueled by fervent buying among bursabets members, but said the gains are unlikely to match the effect achieved by WallStreetBets.
“Of course not,” he said. Malay Post when asked if bursabets will have the same success as the American group.
“But strong earnings and large interim dividends (especially for Top Glove) should provide at least a moderate advantage,” he added.
In recent months, a large group of regular retail traders who grouped themselves under the subreddit wallstreetbets had set their sights against shortlisted who bet on falling GameStop stock prices. The media coverage of his tactics has been spreading in recent days,
Shares of the US-based gaming retailer are now valued at around US $ 500 (RM2,022.91) today, thanks to these regular traders who bought all of GameStop’s available shares after learning they were short. .
Reuters reported that GameStop shares are up 1,600 percent, due to this unusual trading.
Bursabets said it will target JP Morgan for now after the US-based investment bank predicted that the selling price of the rubber gloves would drop due to expectations that the Covid-19 pandemic will disappear soon, as most governments begin to vaccinate their population.
The note, published two weeks ago, was blamed for the stock price drop that followed soon after. Top Glove Corp Bhd’s stock fell 27 sen or 4.1 percent to RM6.36, with some 27.9 million shares realized. The edge reported on January 14.
Despite growing support for the bursabets, some members were wary of their expectations. Only a fraction of Top Glove’s shares are short, or just under three percent, compared to GameStop’s 140 percent.
Existing Top Glove shareholders would need at least 40 percent of total shares shorted to achieve a “short shrinkage.”
A short squeeze is a situation where short sellers rush to hedge their positions or buy stocks that they have thrown to fall in the event of adverse price movement to cover their losses.
