GameStop phenomenon spreads to Malaysian glove stocks
Shares of the US video game shop chain surged from less than $20 to a peak of $492 earlier this week, after millions of amateur investors active on online forum Reddit rallied together to punish short sellers by sending prices soaring.
In short-selling, investors borrow stock, sell it and then buy it back at a lower price, keeping the difference. But if a stock unexpectedly soars, then investors are forced to buy it back at a loss.
Inspired by the US movement, Malaysian mom-and-pop investors on Thursday set up their own Reddit group, naming it BursaBets after the country's stock exchange.
Like the US group WallStreetBets, BursaBets became an online rallying spot for those urging people to buy and hold shares, in this case, targeting glove stocks.
Malaysia is the world's top producer of latex gloves, and major producers saw their shares jump last year on strong demand due to the coronavirus pandemic.
But the companies were hammered in recent weeks as vaccines became available and they were targeted by short sellers, after the government lifted a ban on the practice.
Top Glove, the world's biggest maker of rubber gloves, saw its stock soar almost 300 percent last year, but later fall by about 40 percent.
The day after the BursaBets group was set up, its stock rose over eight percent on the Kuala Lumpur stock exchange.
Rival companies also notched up strong gains -- Hartalega put on over five percent, and Supermax was up 3.6 percent.
"I believe the current price of gloves are very undervalued, and my personal stance is that I want to hold on to it until it gets to its fair value," said "_Revenant_", the founder of BursaBets which has over 6,800 members.