Be wary of chatrooms promoting certain stocks, investors told

KUALA LUMPUR – The Securities Commission and Bursa Malaysia have advised Malaysian investors to be cautious of social media chatrooms that try to influence investors to buy or sell certain stocks based on speculation or rumours.

The regulators in a joint statement today said they are closely monitoring the local stock market in light of the current price surge of selected stocks in the United States markets, fuelled by such chatrooms against short-sellers.

“Investors should also be wary of discussions that may trigger security breaches, such as the provision of investment advice or stock recommendations without a licence.”

Any person found guilty of the offence may be liable to a fine not exceeding RM10 million, or imprisonment not exceeding 10 years, or both.

According to the regulators, market dynamics between the US and Malaysia differ.

“In Malaysia, regulated short selling (RSS) is only applicable to approved securities in the RSS list, which currently comprises 218 securities. Limits are imposed to prevent excessive short-selling activities.”

In addition, RSS trades require investors to either borrow the approved securities to be short-sold or have confirmation of borrowing of the approved securities.

RSS must be undertaken in a designated account, where sell orders must be placed at the best offer price or higher.

The regulators said they also conduct real-time monitoring of all trading activities to detect, analyse and escalate trading concerns promptly.

“Robust frameworks are in place to ensure an efficient, fair and orderly market.

“Where warranted, the commission and Bursa Malaysia will take necessary measures to curb disruptive trading practices and market abuse.”

The Minority Shareholders Watch Group today cautioned minority shareholders to exercise diligence, and be aware of the risks involved when taking on institutional investors, who short certain shares.

It said in “bursabets” – a new subreddit on social news aggregator site Reddit – Malaysian retail investors have been discussing buying up stocks of glove makers, noting that the share prices have dipped in recent months, despite these firms reporting increasing profits.

It said some small investors in Malaysia have been inspired by retail investors’ recent action to fuel the GameStop stock rally. – Bernama, January 29, 2021