Greedy investors may manipulate Bursabets to disrupt trading, says stock market watchdog

Syed Jaymal Zahiid
·2-min read
Top Glove’s share price gained 40 sen or a 7 per cent surge as of noon yesterday, just hours after news emerged that retail investors are behind a drive to prop up the stocks of the world’s largest medical glove maker. — Bernama pic
Top Glove’s share price gained 40 sen or a 7 per cent surge as of noon yesterday, just hours after news emerged that retail investors are behind a drive to prop up the stocks of the world’s largest medical glove maker. — Bernama pic

KUALA LUMPUR, Jan 30 — A stock market watchdog has warned the public about the risk of social media investment tips after local retail investors behind the “Bursabets” drive helped prop up share prices of local glove manufacturers yesterday.

Minority Shareholders Watchgroup (MSWG) said there is potential manipulation on the part of Bursabets members who could have nudged unknowing investors to drive the share prices up so they could offload them at a higher margin, business paper The Edge reported today.

“The gist of the activity is that one, or a group of retail investors, encourages other retail investors to buy the shares of a particular counter with the intention of driving up the price,” its chief executive Devanason Evanson was quoted as saying.

“There is a risk that the party... may actually be unloading their share prices at the higher price.”

But stock market observers remain divided on whether or not the event amounted to market manipulation, according to The Edge’s report.

Devanasan, while agreeing that the Bursabets phenomenon is a disruptive force to the traditional stock market, said that it was the job of regulators to decide if action should be taken.

On the other hand, others believe there is nothing irregular about individual retail investors rallying behind certain companies, and some said it was a positive thing that should be encouraged.

“Pump-and-dump exercises are common. These exercises are usually thematic,” private equity investor Ian Yoong was quoted as saying.

“The more recent popular themes are gloves, vaccine, steel, solar power, and government projects,” he added.

Still, Yoong said investment advice found on popular social media platforms like Reddit or messaging applications are rarely qualified.

“There are indeed good advisers but they are rare. Ask yourself why would good investors give advice rather than invest themselves?” he was quoted as saying.

The Securities Commission on Friday issued a warning telling public investors to be wary of content in social media platforms as news of growing support for “bursabets” broke out.

Top Glove’s share price gained 40 sen or a 7 per cent surge as of noon yesterday, just hours after news emerged that retail investors are behind a drive to prop up the stocks of the world’s largest medical glove maker.

Top Glove Corp Bhd’s share on Bursa Malaysia opened this morning at RM7.05, a rise of over 13 per cent from yesterday. It was the highest since the stock price took a tumble at the end of June last year after its factories were shut due to Covid-19 spreading among its largely migrant workforce.

The short rally also appeared to have extended to other glove makers. The share prices peaked at day time but mostly dipped by noon.

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