Source from The Edge:  https://www.theedgemarkets.com/article/brokerage-houses-tighten-margin-financing-glove-makers-stocks-amid-trading-madness

On June 2, both Maybank Investment Bank Bhd and RHB Investment Bank Bhd have tightened their share margin valuation on glove-related counters, starting today, following the relentless craze for glove makers' stocks.

According to circulars issued by both investment banks, margin financing curbs will be imposed on the trading of shares in Hartalega Holdings Bhd, Top Glove Corp Bhd, Kossan Rubber Industries Bhd, Supermax Corp Bhd, Rubberex Corp Bhd and Comfort Gloves Bhd — at lower valuations compared to their current share prices.

*Haircut on glove sector by RHB Investment Bank Circular

Glove sector has been outperform other sector during this COVID Pandemic due to demand surged. The lockdown of the economy causing the oil price to dip to the lowest of 14 USD per barrel, thus lower the raw material price for glove's makers. The strengthening of USD against MYR also giving a plus to the glove sectors. Glove's maker like Supermax has rose more than 600%  YTD from RM 1.3X to highest of RM 8.2X.

Why brokerage house and investment bank will tighten their margin valuation at this time? Does it indirectly telling investor that they feel that Glove Sectors are EXTREMELY OVERPRICED?

DISCLAIMER: THE ABOVE INFORMATION SOLELY BASED ON PERSONAL OPINION FOR RESEARCH, DISCUSSION AND EDUCATIONAL PURPOSE ONLY. THE ABOVE INFORMATION IS NEVER INTENDED TO BE A BUY/SELL CALL OPINION.

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