KUALA LUMPUR (Jan 29): Amid a move by some retail investors to take on institutional short sellers, the Minority Shareholders Watch Group (MSWG) has advised the retail players to exercise diligence and be aware of the risks involved in such initiatives.

In a statement today, MSWG noted the retail investors are looking to buy shares of medical glove makers in an attempt to drive up their prices and counter the short sellers who tend to drive the prices down.

"In 'bursabets' — a new subreddit on social news aggregator site Reddit, Malaysian retail investors have been discussing buying up stocks of glove makers. Their issue is that the share prices of glove companies have dropped in recent months despite the increasing profits reported by these firms.

"In short, they are inspired by the recent David versus Goliath battle in US firm GameStop Corp," the watchdog group noted.

Shares of GameStop have surged 1,700% in just two weeks as the Main Street piled in and forced hedge funds like Melvin Capital Management to lose billions on their short positions. These small investors discussed stocks on the "wallstreetbets" forum on Reddit anonymously and have fuelled the GameStop rally.

Locally, share of glove makers such as Top Glove Corp Bhd and Hartalega Holdings Bhd jumped this morning.

Urging minority shareholders to exercise diligence and be aware of the risks involved, MSWG said: "Generally, institutional investors tend to have deeper pockets.

"This is not to underestimate the retailers' purchasing power. At the end of the day, it may become an issue of who has deeper pockets and the stamina to sustain their initiatives," it said.

MSWG also cautioned there may be some unscrupulous retailers including "stock market gurus" who may unload their shares after having encouraged other retailers to drive up the share prices.

The Securities Commission Malaysia has constantly warned members of the public against dealing with unlicensed investment advisers as they could be defrauded or used as part of a market manipulation scheme, it noted.

"Eventually, such action by both parties in trying to counter each other will create volatility in the share prices and this may be a risk to the short-term investors.

"As always, minority shareholders should consider this new game in town and make informed decisions according to their risk appetites," it added.

Hartalega was the top gainer on Bursa Malaysia this afternoon, trading 56 sen or 4.59% higher to RM12.76 as at 3.30pm. It rose as much as 10% to RM13.42 in the morning.

This was followed by Top Glove, which was up 7.89% or 49 sen to RM6.70, after having earlier rising 14.33% to RM7.10.

Other glove makers also traded higher, with Supermax Corp Bhd up 3.66% or 24 sen to RM6.80 and Kossan Rubber Industries Bhd up 3.05% or 13 sen to RM4.39.

The buying interest spilled over to the smaller cap glove counters, although there were not much short selling activities in these stocks. Rubberex Corp (M) Bhd was up 1.74% or three sen to RM1.75, Comfort Gloves Bhd was up 1.29% or four sen to RM3.13, and Careplus Group Bhd was up 2.06% or five sen to RM2.48.