Small investors in Malaysia, inspired by the sudden rise in GameStop stock on Wall Street, launched an online movement to push the title of struggling glove maker Top Glove higher on Friday.
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The share of American video game store chain GameStop jumped some $ 20 to $ 492 this week, after a large group of amateur investors agreed on a forum on the Reddit site to buy the title en masse and punish funds that had speculated on the distributor.
With their short sales, large investment funds borrow shares, and sell them in anticipation of a drop in their prices in order to buy them back cheaper at a later date and earn a substantial profit.
But if a security goes up unpredictably, then these large investors are forced to buy back the security to limit their losses.
Malaysian stock marketers on Thursday created a group called BursaBets, similar to the US group WallStreetBets on the community site Reddit.
BursaBets has become a rallying point for investors wanting to bet on a company, in this case, the Malaysian group Top Glove.
Malaysia is the largest producer of latex gloves in the world and its major manufacturers saw their titles jump last year on demand sparked by the COVID-19 pandemic.
But these groups have loosened in recent weeks following the arrival of the first vaccines, and have been targeted by short sales, after the government authorized the practice.
Top Glove, the world’s leading manufacturer of latex gloves, saw its share gain nearly 300% last year, before falling 40% thereafter.
A day after the creation of the Bursabets group, its stock rose more than 8% to 6.7 ringgits (1.37 euros) on the Kuala Lumpur Stock Exchange. Its competitors have also recovered, Hartalega posting an increase of 5% and Supermax by 3.6%.
“I believe that the current price of gloves is very undervalued and my personal position is that the stock should be held until it reaches its equilibrium value”, pointed out on Reddit “Revenant”, the founder of the Bursabets group which has over 6,800 members.
“I just want the market to realize that valuations are too low and that our glove makers deserve better”.