Asian investors join trading frenzy
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A worker inspecting gloves at the Top Glove factory in Shah Alam, Malaysia. Glove-makers have been among the most-shorted stocks in Malaysia since the nation lifted a ban on short selling at the start of this year. Shares of Top Glove jumped as much as 15 per cent yesterday, the most since Sept 11.
PHOTO: AGENCE FRANCE-PRESSE
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Asia's retail investors, emboldened by the meteoric rise of American video-game retailer GameStop, are taking on short-sellers and making their brokers nervous enough to cut off margin lending.
In South Korea, small investors known as "ants" have borrowed so much money to dabble in stocks that at least half a dozen brokerages have stopped offering them leverage.
And in Malaysia, some have formed a similar group targeting shares of glove-makers, one of Asia's hottest pandemic trades of last year.
GameStop's global impact is the latest manifestation of a day-trading mania driven by amateur investors that is boosting the prices of assets ranging from cryptocurrencies to new stock market listings.
"Not afraid, not flinching," said Mr Ji-han Kim, who works at a food delivery chain in Seoul and whose stock portfolio includes Chinese drone-maker EHang, which he says has made him a 412 per cent return, and chip giant Samsung Electronics.
"I see it as a bubble that doesn't burst for a while."
However, this euphoria is not universal and Korea Financial Investment Association data shows that six South Korean brokerages stopped margin lending this month, after loan values hit a record 21.6 trillion won (S$25.7 billion) this week.
"Any more lending to ants would go against the capital requirement ratio for brokerages," said Mr Kwak Sang-jun, a stockbroker at Shinhan Investment in Seoul.
"No one expected the rally would be this explosive, and trading demand from retail investors would grow this explosive."
In Malaysia, shares of Top Glove jumped as much as 15 per cent yesterday, the most since Sept 11. Rival Hartalega Holdings surged as much as 10 per cent, while Supermax climbed as much as 9.2 per cent.
An online community by the name of Bursabets was created on Thursday and it already boasts over 4,800 members.
The moderators of the group have defined it as the "Malaysian version" of Reddit's WallStreetBets forum, to discuss stocks listed on Bursa Malaysia.
Glove-makers have been among the most-shorted stocks in Malaysia since the nation lifted a ban on short selling at the start of this year. Vaccine roll-outs have also sapped the appeal of these pandemic winners.
"I just want the market to realise that the valuations are too low and that our glove companies deserve better," Revenant, one of the moderators of the group, wrote in a post on Thursday.
"Let's discuss, let's meme it up, and get people hyped," the moderator said of Malaysian stocks.
The retail phenomenon is widespread across Asia, where small-time traders have long played an outsized role, especially in markets such as South Korea and China. But investors are becoming younger, and much more leveraged and influential.
In Thailand, where they are known as "moths", such investors piled into local cannabis-related stocks on Thursday in anticipation of regulatory changes by the government there.
In Hong Kong, retail investors borrowed more than US$50 billion (S$66.4 billion) to buy shares in Chinese video-sharing app Kuaishou Technology's float.
And in Australia and Japan, heavily shorted stocks are surging as small investors try to emulate the squeeze that has driven GameStop shares up seventeenfold in little more than two weeks.
GAMESTOP NOT OVER
GameStop has become the poster-stock for apparently coordinated small-investor buying, marshalled over online forums such as Reddit and aimed at inflicting pain on big hedge funds who had bet it would struggle and its stock would fall.
It was the most-traded stock at brokers Stockal and Vested Finance in India, and a tiny Australian nickel explorer with a similar ticker, GME Resources, rose as much as 50 per cent on Thursday in Sydney.
Such trades lit up market forums, such as those of chat app Telegram, KakaoTalk in South Korea and 2channel in Japan, as prices reacted to the retail army, though with much less of the fury of Reddit and much more enthusiasm for locking in gains.
"People are calling me and saying: I'm Fomo (fear of missing out), I think I'm missing something," said Mr Chris Brankin, chief executive of TD Ameritrade in Singapore, a platform for local investors to buy US stocks.
Along with fellow retail darling AMC Entertainment, GameStop has topped volumes over the last few days for Saxo Capital Markets, said its Asia-Pacific chief executive Adam Reynolds, adding that new account volumes are "insane", with 80 per cent of new clients under 40.
"Because they're getting better and because they're getting more confidence, it's sometimes the institutional (investors) who are getting a bit overrun," he said.
Retail investors made up 67 per cent of average daily trading volume on South Korea's main Kospi market last year and a "buy everything" market has lifted it 113 per cent since March.
In Australia, funeral operator InvoCare, salmon farmer Tassal and poultry producer Inghams, all of which have short interest levels higher than 8 per cent, according to regulatory data, leapt to multi-month highs.
Japan's most-shorted stock, telecommunications equipment maker Anritsu, touched a two-decade high.
In China, where investors are more familiar with the swings and roundabouts of a market in which fickle retail buyers command price moves, traders were admiring of the role adopted by US retail investors, but said that such stock volatility would trigger action by Chinese regulators.
"Retail investors in the US are marvellous," read one well-liked post on a chat app run by Hithink RoyalFlush.
For Chinese cryptocurrency entrepreneur Justin Sun, who bid US$4.6 million for a charity lunch with Warren Buffet in 2019, the GameStop party is not over.
"I'll be buying US$1 million of $GME tonight," he said on Twitter.
"Watch out, Asians are coming."
REUTERS, BLOOMBERG
