KUALA LUMPUR, Feb 1 (Sin Chew Daily) — In a move to emulate retail investors from the United States in frenzied purchase of GameStop shares, local retail investors pushed up the price of Top Glove shares on the first day of their move.

As the situation in the US is different from in Malaysia, local retail investors keen to defeat the institutional players or short sellers may face an uphill task in the long term.

Li Zhi Yong, an analyst from Fundsupermart.com, cited three reasons for the difficult battle.

Firstly, the number of retail investors in the US is much higher than Malaysia. This means retail investors in Malaysia may not be as powerful as their US counterparts.

Secondly, GameStop only floated 70 million shares in the market while Top Glove eight billion.

It will therefore not be easy to significantly lift the share prices in the long term.

Thirdly, short selling in the US is common but not here in Malaysia. Short selling activities by local fund managers are restricted and inactive here. The measure is in favor of retail investors in Malaysia.

Restriction on Regulated Short Selling (RSS) of shares in Bursa Malaysia was lifted on January 1. The short selling volume remained low. Statistics showed that only two to three per cent of Top Glove shares were shorted while short sellers of GameStop were forced to buy back shares at a higher price which pushed the share price to spike up further as retail investors also bought the shares in the market.

Li was of the view that Malaysian retail investors were unlikely to succeed. 

On Friday, Top Glove's share price was trending high for the first half an hour, then plummeted.

He advised retail investors not to heed the price trend but pay attention to the fundamentals of the company.

He said Top Glove was strong in its fundamentals. Since the market had switched to economic recovery sectors, he said share prices of glove counters were lower for that reason.

Meanwhile, Lu Wen Hao of Affin Hwang Capital Securities said retail investors in Malaysia were unlikely to succeed in getting more buyers to trap short sellers in short squeeze positions.

Fund managers may face the pressure to buy back the shares at a higher price but they could do so within half a year to one year.

Lu said the move by retail investors against institutional investors who shorted Top Glove shares might win in the short term but they would find it hard to sustain in the long term as this would require massive funds.

A stock's price would ultimately be based on fundamental factors, he said.

Wu Jin Sheng, head of retail research of Hong Leong Investment Bank, said the US did not have restrictions on short selling but Malaysia set four per cent as ceiling for short selling. This measure was in favor of retail investors. 

He said the shares of GameStop, AMC and Blackberry in the US were shorted due to overvaluation of their price earning ratio while Top Glove was still a value buy. For retail investors, Top Glove was still good for long term investment.

Dr. Ch'ng Huck Khoon of CHK Consultancy Sdn Bhd said it was unlikely for Malaysian retail investors to create a miracle due to disparity in capital for retail investors and institutional players.

Since January 12, retail investors in the US have bought GameStop shares in group in a move to counter short selling by fund managers.

GameStop shares spiked 642% in two weeks, creating the miracle of retail investors defeating the hedge funds.

GameStop shares plunged 68% on Thursday as trading platforms imposed restrictions on retail investors and the price finally closed at US$193.60, down 44%.

Inspired by the US retail investors, Malaysians set up BursaBets on Reddit on Thursday to buy Top Glove shares in bulk to repeat the David vs Goliath move in a battle against hedge funds.

Retail investors in Malaysia also joined Top Glove Investors Discussion in Telegram to encourage one another to push up the share price of Top Glove. 

The number of retail investors in the group soared by 35,000 in one night. 

Some retail investors were of the view that the plunge in price of glove counters was due to short selling move and the sell call initiated by a foreign bank.

Top Glove was the fourth most active counter with 161,623,500 shares traded. Its share price rose 91 sen to RM7.12 before it dropped. It closed at RM6.74 on Friday with an increase of 8.53 per cent or 53 sen.