Short sellers invade one of the most popular trades of the pandemic in Asia

The latex gloves are displayed on hand-shaped molds at Top Glove Corp's headquarters.  in Setia Alam, Selangor, Malaysia on Tuesday, February 18, 2020. The world's largest glove maker has secured a vote of investor confidence in market credit as the coronavirus fuels demand for the Malaysian company's rubber products .  The World Health Organization is taking unprecedented step by negotiating directly with suppliers to improve access to gloves, face masks and other forms of protective equipment. Latex gloves are displayed on hand-shaped molds at Top Glove Corp’s headquarters. in Setia Alam, Selangor, Malaysia on Tuesday, February 18, 2020. The world’s largest glove maker has secured a vote of investor confidence in market credit as the coronavirus fuels demand for the Malaysian company’s rubber products . The World Health Organization is taking unprecedented step by negotiating directly with suppliers to improve access to gloves, face masks and other forms of protective equipment.

(Bloomberg) – Malaysian makers of medical gloves, one of the hottest trades in the pandemic, have seen bearish bets emerge since the Southeast Asian nation lifted the ban on the practice early of this year.

Since Malaysia’s decision took effect on January 1, shares worth 1.8 billion ringgit ($ 447 million) have been sold short, over 90% of which were glove makers. such as Top Glove Corp., according to Malaysian Stock Exchange data compiled by Bloomberg. .

The recovery in short selling is boosting volatility and amplifying the woes of glove makers already under pressure from vaccine deployments after the nosebleed rally last year. Top Glove, the biggest in the industry, has lost about a third of its value since peaking in October.

“The negative news feed and short selling will add the counterpoint so far missing in the performance of glove stocks,” said Geoffrey Ng, director of Fortress Capital Asset Management Sdn. “It won’t be a one-way ticket.”

Top Glove shares fell 1.1% at the close of Kuala Lumpur trading, halting a four-day gain, while Hartalega Holdings Bhd. fell 2.2% and Supermax Corp. fell 3.7%.

At the beginning of last year, Malaysia introduced a temporary ban on short selling to ease equity volatility triggered by the coronavirus outbreak. The ban was subsequently extended until the end of the year.

Top Glove was the best-selling stock by value in the first week of trading this year. Short bets on the glove maker have risen at a time when global investors have increasingly focused on controlling viral infections among workers at the glove maker.

Read: Reboot of short selling adds to hot pandemic trade issues in Asia

BlackRock Inc. requested removal from Top Glove’s board of directors last week, citing its inadequate handling of virus outbreaks in the company’s factories. The finance manager voted against re-electing the glove maker’s six board members and said he intends to do the same for the remaining directors in the future.

(Updates to add closing prices.)

Janelle B. Smith

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