Stockisnotfun, providing (purposefully or unwittingly) wrong information is not appreciated.

"Even EPF also dumped already lo" --> Last week EPF was a net buyer of Top Glove. The 40 million shares were lent on Tuesday to an investment bank to be short sold, based on the announcement released by Bursa.

"State of emergency will scare off the foreigner investment further" --> On the contrary, the state of emergency for a prolonged period of time means predictability. It ends the political ruffle over when the elections should be held. Now every institutional investor knows that there will be no major change until at least August. This is good for the market.

BTW short selling is likely not the main reason for the dip, but rather a typical market-broad knee-jerk reaction. Short sale volumes per counter as at 10:55am:

Top Glove - 520,000
Hartalega - 30,000

This is likely mostly retail short volumes. The big boys may be sleeping as it is not yet clear if Bursa will reintroduce the ban on short selling.

A quick note - no shorting today so far.

Just published an update on the short positions for the big 4 glove companies: https://klse.i3investor.com/blogs/bursainvestments/2021-01-12-story-h1539290266-Gloves_Zero_Short_Positions_Closed_for_the_Entire_Last_Week.jsp

In a nutshell - the rally on Friday was NOT caused by closing of short positions. The short seller hasn't closed any short positions for the entire last week.

Just published an update on the short positions for the big 4 glove companies: https://klse.i3investor.com/blogs/bursainvestments/2021-01-12-story-h1539290266-Gloves_Zero_Short_Positions_Closed_for_the_Entire_Last_Week.jsp

In a nutshell - the rally on Friday was NOT caused by closing of short positions. The short seller hasn't closed any short positions for the entire last week.

kfliau, not yet. The latest data that shows the figure as of last Thursday can be seen here: https://www.bursamalaysia.com/misc/missftp/sblnt/NetShortPosition20210108.pdf

The figure is 2.34%, and even if no short sale positions have been closed yet, the net short positions by today would have reached 2.73%.

Short selling on Top Glove exploded in the afternoon to close the day at the following volumes:

Top Glove: 9,050,000 (9% of total volume)
Hartalega: 4,660,700 (22% of total volume)

At VWAP RM6.48 for TG, and RM12.28 for Harta, that's approximately RM105 million spent today on shorting the two counters.

The short sales volume on Kossan was unchanged.

Some clearance of last minute orders is still going on, so the numbers might change slightly, but what this means is that while the attack has subsided, the short seller still appears to have a lot of bullets and he/she is ready to use them when he/she spots weakness.

500,000 TG shares shorted in the first 5 minutes after reopening of trade. 300,000 Harta shares.

Kossan and Supermax have been completely abandoned as it seems.

The short seller appears to be defending the TG and Harta price with their life.

oohlala, sagaraken, LCLY, keet68, I just wanted to thank you for your comments.

Let's just observe patiently. This week's market will be very volatile. In such times I always like to base my decisions on fundamentals, and at least as far as gloves are concerned, there might be no reason for any action to be taken this week. I would "go to sleep".

BALANCE_VIEW, it appears that they have some existing volumes they still need to offload. They have likely borrowed huge chunks of stocks last week. The plan might have been for them to offload them slowly - over the course of 2 weeks, so for now they might just be waiting and looking for weaknesses. Seems like they have spotted weakness with demand for Harta, because the attack this morning is most vicious there.

Shorting volumes for today (as of 11:45am):

Top Glove: 3,099,300 (5% of total volume for the counter)
Hartalega: 1,934,000 (20% of total volume for the counter)
Kossan: 1,863,000 (10% of total volume for the counter)
Supermax: 0

The short attack hasn't ended.

Orlando and Michael Teng, thank you once again. Let's now patiently wait and observe the show on Monday.

super_newbie, sagaraken, seanyap1, Michael Teng, Sales, invest200, jian90, VenFx, treasurehunt, ming, thank you very much for your comments and for your incredible input!

First, please note that I updated the article to reflect the concerns expressed by invest200 and treasurehunt. The net short position reporting indeed lags 1 day behind, so we will know the exact amount of any short positions that might have been closed on Monday evening (usually after midnight).

sagaraken, that might be the case. However, the net short position for this past week is equivalent to RM1.5 billion in value. It is hard to imagine that a player could offload more of this amount of cash in order to try and again press the price down. This amount alone represents almost 0.5% of the gross domestic product of Malaysia!

seanyap1, thank you for pointing that out. Indeed that might be the case. The short seller needs to be able to secure huge amounts of shares per batch, so it might not be as easy for them to do that for Supermax shares as it might be for the other 3 companies. In particular, neither EPF nor KWAP are substantial shareholders of Supermax.

jian90, if it is an unscrupulous attempt for a sort of transfer of shares from one player to another, it has become an extremely expensive one. We can only guess as to if that might be the case.

roadtomillionaires, thank you for your comment.

I think it might be a bit too early to predict on that. The rally at the end of this week was mostly provoked by the news for a new round of tighter movement restrictions. However, as with many other overreactions on Bursa - this piece of news actually has no material value as far as the glove companies are concerned in isolation from any other factors. The big glove companies have no significant business in Malaysia, and only a minuscule part of their revenue is derived from the country. The only way this piece of news impacts the glove companies is via ringgit's exchange rate movement, and even then to a very small extend.

However, the more important thing - the length of the COVID crisis, and therefore the length of the extraordinary earnings the glove companies are expected to record over the next few quarters, hasn't been understood by the broader market and hasn't been factored in the recent rally. Additionally, most people haven't realized that there is a fundamental shift in the hygiene perception around the world, which runs through a broad range of industries and is here to stay. My personal expectation is that if anything near a ceiling is to be reached, that would happen at some point around the third quarter of this calendar year.

pjseow, sosfinance, bpsiah, williamtkb, Orlando, thank you for your comments!

sosfinance, precisely. That is why above in the comments I mentioned that we can only analyse the publicly available data and nothing more. This is an over-the-counter deal, so we cannot know:

- Who the short seller is;
- Who the short seller borrowed the shares from (except for the 40 million shares borrowed from EPF);
- How much the short seller pays for borrowing the shares;
- How long the short seller can hold the shares;
- Any other parameters of the arrangement;
- Any future plans of this or any other short seller.

(This is relevant to bpsiah's and to Orlando's questions as well.)

However, fortunately the publicly available information gives us some important pieces of data, such as the daily RSS volumes, and the net short positions still open. This is sufficient for our main purposes, and we can derive from it directly or indirectly information on:

- What percentage of the short positions have been closed up to now;
- How close the currently open short positions are to hitting the limit;
- What paper losses might exist for the short seller, excluding any unknown fees (not part of the article, but mentioned by treasurehunt above in the comments section).

We can also extrapolate one more piece of information. As the Kossan short sale position has been closed to a much larger extent than the ones on the other 3 glove counters, this may signify that the short seller's plan has indeed been to close the position relatively quickly - potentially within these 2 weeks since the beginning of the year. I have no doubt that this is what would have happened with all of the counters should the MCO-related news not have arrived at this time.

koolset, thank you. I enjoy your articles, too!

Wow! I chose a bad moment to go for lunch apparently.

Thank you everyone for your comments and for this great discussion. I just want to request that we keep it civil. We all want to know the truth and different factors point at different directions.

For instance, while the initial short position was opened by a foreign institution, later on during the week, local institutions were net sellers on Bursa, so it might have been a "joint exercise". We will likely never know.

What we know is the publicly available data, which points (at least for now) towards an unpleasant scenario for the short seller(s). However, let's not forget that they still have a significant amount of space to open a yet larger short position on each of the 4 stocks, which would result in further volatility in order to try and cover their existing short position at lower net loss. The most important thing is to think rationally in times like this, with as little emotion as possible.

seanyap1 and Goldgent, thank you for your comments.

Sean, I just wanted to reiterate on the positions - 2.34% is the current net short position, i.e. short position that has NOT been covered yet. 2.4% is the total RSS volume for the last week. So the difference is just 0.06%, or potentially 0.28%, if the other short seller who had an open SBL short position had covered it earlier.

Could you let me know where you saw the EPF filings report? I would be interested to take a look if it is publicly available.

Goldgent, structured warrants on their own shouldn't be a market mover as they do not have economic effect on the company. I understand the thought that the issuers might be interested in trying to suppress the price, but I believe that is part of the reason for what we have been observing this past week.

JBond007, thank you for your comment.

Indeed there might be a lot of trading opportunities as glove counters have been among the most active for a year now.

cpchuan, thank you for your comment. I hope it has helped you in some way!

Hi Goldberg, thank you for your comment.

Three things that are not directly related to this article, but are important factors for how we could expect the stock prices to move in the near to mid term are:

1) EPF just started paying out the first stage of i-Sinar approved withdrawals. Up to now the total approved amount is RM19.62 billion, so we can expect that at least some part of it will flow into the stock market, with most of that amount likely chasing "popular theme" stocks. With further travel restrictions and potential corresponding economic consequences, the theme will likely be healthcare (including gloves) in the near term.

2) Top Glove is going to start distributing the dividend for 1QFY21 at 16.5 sen per share equal to about RM1.3 billion. We can expect that a significant part of that money might go into buying more of the company's stock.

3) Thereafter the things look very bright as far as corporate calendar is concerned. On February 17, Supermax will be releasing their quarterly report for the last quarter of calendar year 2020. On March 11, Top Glove will be releasing their quarterly report for 2QFY2021. Both of these are expected to be record breaking stellar reports.

I published a new article with some calculations regarding if the short positions have been closed: https://klse.i3investor.com/blogs/bursainvestments/2021-01-09-story-h1539233535-Gloves_The_Bad_Guy_Loses_From_Time_to_Time.jsp

The answer is - largely no.

I published a new article with some calculations regarding if the short positions have been closed: https://klse.i3investor.com/blogs/bursainvestments/2021-01-09-story-h1539233535-Gloves_The_Bad_Guy_Loses_From_Time_to_Time.jsp

The answer is - largely no.

"WenJun Let's say if I use RSS account to short ABC stock, do I have to contact someone to borrow shares from them first? Or the system will automatically do it for me?"

This one would depend on many factors. It is possible that you might be able to do short trades via your brokerage. I would personally not recommend it.

"WenJun Does RSS need to borrow tickets first only can short? Or is it PSS or something that the 40m shares are used on?"

Yes, every type of short selling involves borrowing of shares from someone else. You sell the shares that you borrow, and at a latter point you have to buy them back and return them to the rightful owner of the shares.

"Gaussian Who borrowed 40M from EPF to short sell?"

These are the approved borrowing representatives for SBL: https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/assets/5d85b5a039fba237a68d7cec/SBLNT-Borrowing-Reps-List-Sept_2019.pdf

The short seller appears to be defending almost entirely their position on Top Glove since yesterday. As of right now, these are the RSS volumes for each of the 4 glove counters for today:

Top Glove: 22.3 million shares
Hartalega: 1.13 million shares
Kossan: 3.1 million shares
Supermax: 267 thousand shares

"kl_guy wonder how many RSS share the IB have left?"

I have included a breakdown of the still open short positions on each of the 4 glove stocks here: https://klse.i3investor.com/blogs/bursainvestments/2021-01-05-story-h1539174820-The_Big_Gloves_Short.jsp

Short sales just surpassed 20 million volume for the day. That's a little over 27% of all sales of Top Glove stock for the day.

An update on the short selling activity as of close of day trading yesterday:
https://klse.i3investor.com/blogs/bursainvestments/2021-01-05-story-h1539174820-The_Big_Gloves_Short.jsp

Short positions have largely not been closed, and new short positions have been opened instead.

An update on the short selling activity as of close of day trading yesterday:
https://klse.i3investor.com/blogs/bursainvestments/2021-01-05-story-h1539174820-The_Big_Gloves_Short.jsp

Short positions have largely not been closed, and new short positions have been opened instead.

Morpheus61, thank you for your comment.

As we have discussed in the past, my personal opinion is that short selling on relatively small, local stock markets should be allowed only when necessary, and only with good reasons, especially when it comes in high volumes.

Regarding the structured warrants, unfortunately there the situation might be one of supply and demand. As long as there is demand for these products, someone will come around and supply them. I have little hope for them being disallowed straightaway any time soon.

MatKoh, there are certainly significant discrepancies between what is happening on Bursa and on other stock markets. RSS activity is likely one of the (main?) reasons for that.

witan, thank you for your comment. I hope the information is at least a little bit useful.

MatKoh, unfortunately there is no concrete answer to that. It depends on their arrangement with the counterparty they have borrowed the shares from. However, for every day the short seller doesn't close the position, they normally pay a very substantial fee (the amount again depends on the specific arrangement with the lender).

treasurehunt, thank you for your comment. There are significant structural differences between the extranormal profits experienced by glove manufacturers and the peak profits expected to be experienced by palm oil producers. I will probably write a more detailed article on that a little bit later this year.

An update on the short selling activity. As of the beginning of the trading day today, the RSS short positions on glove stocks have largely not been closed: https://klse.i3investor.com/blogs/bursainvestments/2021-01-05-story-h1539174820-The_Big_Gloves_Short.jsp

An update on the short selling activity. As of the beginning of the trading day today, the RSS short positions on glove stocks have largely not been closed: https://klse.i3investor.com/blogs/bursainvestments/2021-01-05-story-h1539174820-The_Big_Gloves_Short.jsp

Philip, yes I am. I started entering Top Glove at 6.80 with more significant volume buying at around 6.60; and Supermax at 7.80, with most of my purchases below 7.30. At the current valuations I have considered entering Kossan recently, but TG and Supermax are attractive enough.

"passerbyA "Please be informed that a BULK TRANSFER from the Corporate Action of SUPERMAX CORP has been executed."

May i know whats BULK TRANSFER?"

This is likely the bonus treasury shares that were issued on Monday. 1 bonus share for every 45 existing shares.

moneymakerx, could you let me know where you monitor the short trades?

arv18, Felicity, michaelwong, and calvintaneng thank you for your comments.

Felicity, the glove manufacturers' stock has not been moving in tandem, although it might seem so if you don't zoom in closer. Top Glove's price has run furthest away from its fair value, followed by Supermax earlier, and then Kossan over the last couple of weeks of December. Hartalega's price has stayed close to its fair value (or, dare I say, a little bit higher than that). However, the current market prices are off by a significant margin in my humble opinion.

calvintaneng, as mentioned above, this is a topic for another discussion. Good luck with the CPO trades.

"BALANCE_VIEW

With high dividend there is possibility that the short seller to close their position and siht in their pant as a lot big fund will b waiting 2 buy as dividend yield is above 10%."

Just a note on this, at the current market price - RM5.76, the expected dividend yield is actually higher. Here's the calculation:

- Analyst consensus EPS for FY2021 = RM1.17

- Dividend payout ratio = 66% (because Q1 it was 56%, Q2-Q4 will be 70%)

- DPS = RM0.77

- Dividend yield = 13.41%

Note that the consensus EPS is likely to be revised upwards. 1QFY2021 EPS was 29.59 sen and that was expected to be the weakest quarter for the year. Yet, the consensus estimate includes such opinions as AmInvest's EPS 96.8 sen for instance, or JF Apex' EPS 98.4 sen. If they are correct, it would mean that the weak Q1 would be responsible for more than 30% of the total earnings for the entire financial year. In other words, 13.41% dividend yield is the lowest estimate.

vvcb, thank you for your comment. I believe everyone has a right to express their opinion, although it is of course always best for that opinion to be supported by solid data and logical arguments. If that is the case, I am always up for discussions :)

I updated my post with the short selling data for today:
https://klse.i3investor.com/blogs/bursainvestments/2021-01-05-story-h1539174820-The_Big_Gloves_Short.jsp

It appears the short positions opened yesterday haven't been covered yet, to a significant extent (we will know tomorrow how much). Additionally, more short positions have been opened.

CharlesT, sorry to have scared you! I am not familiar with CPTeh though.

ckkhen, thank you for your comment. I believe your decision will pay off eventually.

BuLLRam, thank you for your comment. Indeed that is the case, and how the story ends (or rather how quickly it ends) depends on the existing investors.

LaoTzeAhSir, thank you for your comment, but let's not call each other names here. It's not beneficial.

paperplane and Goldberg, thank you for your comments.

paperplane, I enjoyed your post on game theory and the effects of oligopoly in the glove manufacturing space (saw it for the first time now). I wrote a post on a similar topic just a few days ago on another platform, from a different angle (from economies of scale point of view), with the same conclusion.