My analysis of AmInvest's "analysis":

https://klse.i3investor.com/blogs/bursainvestments/2021-01-13-story-h1539318879-Top_Glove_Serious_Material_Inconsistencies_with_AmInvest_s_Report.jsp

My analysis of AmInvest's "analysis":

https://klse.i3investor.com/blogs/bursainvestments/2021-01-13-story-h1539318879-Top_Glove_Serious_Material_Inconsistencies_with_AmInvest_s_Report.jsp

My analysis of AmInvest's "analysis":

https://klse.i3investor.com/blogs/bursainvestments/2021-01-13-story-h1539318879-Top_Glove_Serious_Material_Inconsistencies_with_AmInvest_s_Report.jsp

Update to my post on short selling:
https://klse.i3investor.com/blogs/bursainvestments/2021-01-12-story-h1...

Some short positions on Top Glove stock have been closed on Monday. The amount is minimal - 3,680,900 shares, equivalent to only 1.7% of the net short position on the stock of the company.

As of Monday, the net short position on Top Glove is equal to 2.68% of its stock, or 1.32% away from the limit.

coldcoldwater, yes, that's the best theory we have right now. The short seller has been unable to procure enough shares of Supermax, because EPF and KWAP (for example) are not substantial shareholders there. This might also be why JP Morgan last month didn't issue target price for Supermax, but did so for Top Glove, Hartalega, and Kossan. Of course all of this is just speculations, and we cannot know for sure.

CJkenho and limontea, thank you for your comments.

CJkenho, it is hard to estimate how much is the average shorted price for the short seller at this point, but since most of the shorting was done in the morning last Monday, let's assume that specifically for TG, it is similar to the closing price as of 31 December 2020 - RM6.12

The short seller is paying fees to the lender of the shares, likely on a daily basis. The fee may be significant in value. Thus, it is conceivable that if the short seller does not close their position within this week, their break-even price might be around RM6. Obviously currently they are very much in the red. However, my suspicion is that there is a higher order game in place here, i.e. it is not simply a game where the short seller necessarily wants to profit only from the short trade itself.

Regarding why they didn't attack more aggressively, I believe that they might, at present, not have many shares left for shorting. They might be trying to procure more shares from lenders (such as EPF for instance), but we can't know unfortunately.

Israel has a number of strategic advantages over most other countries in the world:

- Small population (101st place in the world)
- High population density (17th place in the world)
- High level of wealth (19th in GDP per capita)
- Great infrastructure (23rd in the world)
- Extremely well-equipped army

While some of these are shared by other countries, like city-states in Europe, Singapore, Hong Kong, or countries like The Netherlands and Denmark, the most important differentiator for Israel is this - one of the (if not THE) most powerful political lobbies in the world. I don't think Muhyiddin, for instance, could call the CEO of any of the vaccine manufacturers at 2am at night to ask him for a favor.

"stevenckheng weird lo, seems like not RSS parking the wall at 6.7. IB block 6.7 ?"

This has been a very well-orchestrated exercise. It's not done just via RSS, as the "exercise" started in December. Overall, the goal is to dull down any upward price momentum as much as possible by setting up resistance levels. This is done both via short selling, and via standard selling.

"chiongmouguai Are funds still shorting glove stocks? Anyone can enlighten please"

Yes, they are. Short selling for the day on Top Glove is 1,976,000 shares up to now.

Morning session shorting volumes and value based on VWAP:

Top Glove - 1,750,000 (RM11.38 million based on VWAP RM6.50)

This is equivalent to 4.15% of all transactions this morning. Price still went 14 sen, or 2.18% up.

aphrodite, that's not a choice. That's a defense of an already existing enormous short position. They have no choice but to defend it at present. The idea is to try to subside the momentum as much as possible, and potentially to suppress the price a bit when weakness is spotted. The alternative is to buy back the shares and participate in the buy frenzy, which would result in enormous losses for them.

Short selling is speeding up. RM6.50 needs to be defended at all costs apparently. 1,250,000 shares shorted so far and increasing. More than 700,000 just in the last 30 minutes.

BALANCE_VIEW, wkc5657, thank you for your comments.

wkc5657, please note that at the peak of the attack last Monday, the short seller unleashed short sales equivalent to 1.52% of the entire outstanding stock of Top Glove. As of yesterday end of trade, the net short position on Top Glove is 2.73%. Thus, there is only 1.27% left until the limit of 4% is hit. In other words, unless the short seller unleashes all at once, in a last attempt to bring the price down, there would be no other possibility for a downtrend.

It appears that the short seller might have been unable to procure sufficient quantities of shares for short selling on Supermax, probably because the free float there is significantly smaller. If yesterday was any tell, it seems like the short seller may be going more aggressively now on Hartalega.

Winner88, thank you for your comment. We will need to wait and see if Bursa might decide to reimpose the ban on short selling now with the new round of MCO.

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.