KUALA LUMPUR: The manic ride in GameStop Corp sparked by American amateur traders on Reddit has inspired some Malaysians to form a similar group targeting shares of glove makers — one of Asia’s hottest pandemic trades in 2020.
The online community by the name of Bursabets was created on Thursday and already boasted more than 9,400 members as of Saturday afternoon. Its moderators have defined it as the “Malaysian version” of the WallStreetBets forum on Reddit, with a focus on stocks listed on Bursa Malaysia.
The discussions so far have centred on glove makers and calls to rally against institutional investors who have kept valuations of the sector low.
Shares of Top Glove Corp jumped as much as 15% on Friday before paring those gains to 8.5% higher. Rival Hartalega Holdings Bhd surged 5.4% while Supermax Corp climbed 3.7%. But the benchmark FTSE Bursa Malaysia KLCI Index fell 0.9% on Friday, capping a third week of losses.
Glove makers have been among the most-shorted stocks in Malaysia since the country lifted a ban on short selling at the start of 2021. Vaccine rollouts have also sapped the appeal of these pandemic winners.
“I just want the market to realise that the valuations are too low and that our glove companies deserve better,” “Revenant”, one of the moderators of the group, wrote in a post on Thursday. “Let’s discuss, let’s meme it up, and get people hyped!” the moderator said about Malaysian equities.
GameStop has been the focus of a retail-investor-fuelled frenzy in recent days that has spread further beyond Wall Street. That has caught the attention of Malaysian securities regulators, who are urging investors to exercise caution when participating in social media chatrooms promoting specific stock trading.
The Securities Commission and Bursa Malaysia said in a joint statement Friday that they are “closely monitoring” the local stock market in light of the current price surge of selected stocks in US markets, fuelled by social media chatrooms against short-sellers.
“Investors should also be wary of discussions in these social media chatrooms that may trigger securities breaches such as the provision of investment advice or stock recommendations without a licence,” the statement said.
When warranted, regulators will “take the necessary measures to curb disruptive trading practices and market abuse”, it said.
On Bursabets, a member with the handle u/chen97 posted a meme with a wordplay on Avengers Assemble, an American animated television series based on the fictional Marvel Comics superhero team. The meme said “Retailers Assemble! The Game just begins!”
Individual retail investors with money as well as time on their hands has been a major theme of markets around the world in the year since the Covid pandemic began.
In Thailand, average daily trading turnover jumped to 99 billion baht in January, a monthly record, propelled by a growing number of small investors.
Transactions by individuals this month made up about 46% of total trading, an increase from 43% in 2020, stock exchange data showed.
Thousands more Thais have been opening new trading accounts. While January figures have yet to come out, the 88,720 new account openings in the October-December period marked a 310% jump from a year earlier, and a 23% surge from the previous quarter, according to the Stock Exchange of Thailand.
Rising retail participation, part of a global trend during the pandemic, has contributed to a 45% rally in the SET Index from its March low.
“Interesting data shows there have been a lot more new trader faces, especially among the young generation,” said Soraphol Tulayasathien, a senior executive vice-president at the SET. There is still potential for the number of new individual traders to increase, he said.
The entry of first-time stock buyers has helped offset the exit of foreign investors, who have sold a net 10.9 billion baht worth of shares so far this year after offloading 264 billion in 2020.
Individual investors bought a net 27 billion baht worth of stocks in January after purchasing net 217 billion in 2020, according to the exchange’s data.
In South Korea, meanwhile, small investors known as “ants” have borrowed so much money to dabble in stocks that at least half a dozen brokerages have stopped offering them margin loans.
“Not afraid, not flinching,” said Ji-Han Kim, who works at a food delivery chain in Seoul and whose stock portfolio includes the Chinese drone-maker Ehang, which he says has made him a 412% return, as well as the chip giant Samsung Electronics.
“I see it as a bubble that doesn’t burst for a while.”
However, this euphoria is not universal and Korea Financial Investment Association data shows six South Korean brokerages stopped margin lending this month, after loan values hit a record 21.6 trillion won ($19.3 billion) last week.
“Any more lending to ants would go against the capital requirement ratio for brokerages,” said Kwak Sang-jun, a stockbroker at Shinhan Investment in Seoul.
“No one expected the rally would be this explosive, and trading demand from retail investors would grow this explosive.”