Why all Glove Shares are rebounding so sharply?

Koon Yew Yin 4 June 2020

2 days ago, all the investment bankers decided to cap all the glove shares by 35 %. As a result, all those who used margin finance would have to sell to meet margin calls. That was why these glove share prices dropped so drastically in the last 2days. Clever investors who have buying power should have taken the advantage of the opportunity to buy. 

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As I said before, no stock can drop continuously for whatever reason. After a few days, it will rebound as you can see all glove shares are rebounding quite sharply.  

Investment banks normally have many kinds of shares in their portfolio. Due to Covid 19 pandemic almost all the listed shares are being depressed and the have to sell to cut loss. They know that due to Covid 19 pandemic, the demand for gloves far exceeds supply. As a result, all the glove prices should go up higher and higher which should be reflected on their share prices. 

It looks like all the investment bankers colluded to cap all the glove stocks by 35% on 2 June 2020 so that they can buy at cheaper prices. 

My advice to all investors 

This Covid 19 pandemic reminds me of SARS (Severe Acute Respiratory Syndrome) in 2003 which lasted about 18 months. I was the 2nd largest shareholder of Supermax which shot up 650% within 15 months. As you know Covid 19 pandemic has just started about 6 months ago, the urgent demand for gloves will continue for a long time until the pandemic is under control. All glove prices will continue to go up higher and higher which should be reflected on their share prices. As I am writing this article, Comfort shot up 32 sen and Supermax shot up 36 sen, after 2 hours of trading.  

To be safe investors should not use margin finance to its limit to avoid margin call. As the share price goes up, you can use a little bit more margin finance to buy more shares. 


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