By Chester Tay
KUALA LUMPUR--Malaysian glove stocks including Top Glove Corp. Bhd. pulled back Tuesday on profit-taking and a sharp reduction in short-covering activities, as investors grew more confident that the Omicron variant won't derail global economic recovery.
Shares of Top Glove, which gained 21% Monday in their largest one-day gain in two decades, retreated 12% in morning trade Tuesday. Other makers of protective wear including Supermax Corp. Bhd., Kossan Rubber Industries Bhd. and Hartalega Holdings Bhd. shed 9.8%, 5.1% and 6.1%, respectively.
The declines come as short sellers are sitting on the sidelines a day after their buying was a factor in pushing glove stocks higher, TA Securities chartist Stephen Soo said. As investors reassess worst fears about the Covid-19 Omicron variant in global markets and prices of glove stocks fall, short sellers need not rush to cover their opening short positions, he said.
Short sellers borrow stocks they believe are overvalued and immediately sell them, hoping to repurchase shares for a lower price later and pocket the difference.
Bursa Malaysia's regulated short selling data on Monday showed that total short selling value amounted to 76.8 million ringgit ($18.1 million), of which 45% was attributable to short selling of Top Glove, the world's largest glove maker by capacity.
"Some of these glove stocks are still heavily short," Mr. Soo added, saying that those positions could limit stock declines going forward. "I believe [short sellers] will still continue to cover, so that should provide some cushion to profit-taking."
The retreat in glove stocks also appears driven by easing concerns over the Covid-19 Omicron variant, with investors gaining confidence that vaccine makers could update their vaccines to combat it.
Write to Chester Tay at firstname.lastname@example.org
(END) Dow Jones Newswires