KUALA LUMPUR – The lifting of the short-selling ban by Bursa Malaysia Bhd and Securities Commission (SC) on January 1 next year has been viewed as having a muted impact on the overall bourse.
Kenanga Research, in a note today, said only nine names out of a list of 46 stocks with total net short positions are FBM KLCI component stocks, including Top Glove, Hartalega and Supermax.
“The lifting comes with new, tighter measures – such as capping the net short position at 4% and reducing the daily gross short position limit from 3% to 2% – that may lessen volatility of potential short-selling transactions,” it said.
The research house said the FBM KLCI is now up 6% year-to-date and over 38% from the March bottom, hence, the ban lift is probably timely and welcome.
Yesterday, Bursa Malaysia and SC announced that they will uplift the temporary suspension of regulated short selling (RSS) and have reviewed other market management measures introduced this year following heightened market volatility arising from the broader impact of Covid-19.
The suspension of RSS, scheduled to expire on December 31, will be uplifted on January 1 to facilitate investors’ risk management and revive securities’ borrowing and lending activities, which is an integral capital market function to promote product development and market-making activities, they said.
The research house added that, given the strong rally in the month-to-date witnessed on the FBM KLCI where it rose 7.6%, resoundingly outperforming the rest of Asean, the reintroduction of the RSS is probably timely if only to temper the emerging animal spirits and make this recovery more sustainable.
“We remain positive on this market, with an 2021 year-end target of 1,803 points,” it said. – Bernama, December 17, 2020
