Glove Makers In Spotlight As Regulated Short-Selling Lifted

Glove-making companies will be closely monitored given their high net short positions as a ban on regulated short selling (RSS) will be lifted from Jan 1.

Kenanga Research, in its latest report, said the latest RSS aggregated net short positions taken from Bursa Malaysia’s website as at the close of Dec 15, showed glove makers as having the highest net short positions.

The top four names with the highest percentage total outstanding net short positions are not surprisingly glove makers namely Top Glove Corp Bhd (1.27%), Supermax Corp Bhd (1.23%), Kossan Rubber Industries Bhd (1.15%) and Hartalega Holdings Bhd (0.97%), ” Kenanga Research said.

However, the regulator extended the ban on the intraday short-selling (IDSS) and intraday short-selling by proprietary day traders (PDT Short Sale) until Feb 28, 2021. Consequential to the extension of PDT Short Sale, temporary waivers in relation to PDT will also be extended to Feb 28, 2021.

To recap, the ban on short selling of equities was imposed by the Securities Commission Malaysia (SC) and Bursa Malaysia starting on March 24 this year when global markets were hammered by the equity rout. The move, said the regulators, was “part of their proactive measures to mitigate potential risks arising from heightened volatility and global uncertainties.”

The suspension was initially targeted to end on April 30 but was extended for three times. At first it was targeted to end on June 30, but was extended till Dec 31, 2020 and it was further extended till Feb 28, 2021

Kenanga also noted that in terms of total short able volumes/average daily trade volumes, the figures translated to 3.50 times, 2.58 times, 6.77 times and 13.38 times, respectively, which are among the lowest in the list of 46 names.

Kenanga said that only nine companies out of a list of 46 stocks with total net short positions of 0.1% and above of outstanding shares are benchmark FBM KLCI components which are the three main glove makers: Top Glove, Supermax and Hartalega.

It noted that the lifting of the ban comes with tighter new measures which caps the net short position at 4% and reduces the daily gross short position limit from 3% to 2%.

The SC and Bursa Malaysia Bhd will lift the temporary suspension of Regulated Short Selling (RSS) and have reviewed other market management measures that were introduced this year following heightened market volatility arising from the broader impact of Covid-19.