Short-selling restart adds to woes of Asia’s hot pandemic trade

SINGAPORE • Malaysia’s resumption of short selling is adding to the woes of glovemakers, which are already navigating concerns that vaccines will dent demand for their products and infections at their factories can curb output.

Shares in Top Glove Corp Bhd, the world’s biggest rubber glove-maker, plunged as much as 15% in their first trading session of the year yesterday as Malaysia’s decision to lift a ban on regulated short-selling took effect.

Hartalega Holdings Bhd tanked as much as 14%, while Supermax Corp Bhd fell 10%.

The slump in glovemakers, that achieved a cult-like status with some investors last year, doesn’t bode well for Malaysia’s equity market, which relied on the sector for much of the gains last year.

In 2020, Supermax surged more than sevenfold, Top Glove nearly quadrupled and Hartalega more than doubled to become the top three gainers on the FTSE Bursa Malaysia KLCI Index.

With yesterday’s declines, the gauge fell as much as 2.1%, the most since Nov 30.

“Some foreign hedge funds have started short selling after the ban got lifted,” said Geoffrey Ng, director at Fortress Capital Asset Management Sdn Bhd.

“Some investors are fearing that the vaccine rollouts will curtail demand for gloves.”

Malaysia early last year introduced a temporary ban on short-selling to ease stock volatility sparked by the coronavirus outbreak.

The prohibition was later extended to year-end.

“Short selling in glovemakers can add to the concerns on the sector and similar bets” on pandemic winners, said Danny Wong, CEO at Areca Capital Sdn Bhd.

“Glovemakers will still make money but for some investors vaccines availability has changed the long-term outlook.” — Bloomberg