Malaysia on Monday suspended short-selling until April 30 due to heightened volatility amid the spread of the coronavirus. In a joint statement, the country’s market regulator and stock exchange.
Securities Commission Malaysia (SC) and Bursa Malaysia have decided to temporarily suspend short-selling of equities. It aims to mitigate further volatility in the market.
In addition, Securities Commission Malaysia said, “We continue to observe trading activities in this exceptionally volatile global and market environment.”
“We will assess the situation and consider the necessary additional precautionary measures, as appropriate, to support an orderly market,” it added.
The suspension will involve intraday short-selling (IDSS) and restricted short-selling (RSS), as well as intraday short-selling by proprietary day traders. The suspension does not apply to permit short-selling (PSS).
According to theedgemarkets.com, short selling occurs when an investor borrows a security to sell it on the open market, with the plan to buy it later at a cheaper price. Simply put, short-sellers bet on and profit from a drop in the security’s price.
Notwithstanding the short-selling suspension, both the SC and Bursa Malaysia reiterated their stance that markets need to remain open during the movement control order (MCO) period to ensure continued and reliable access to the Malaysian capital market. They said that is is vital for immediate and long-term market confidence.
Last week, the SC announced that Malaysia’s capital markets including Bursa Malaysia. It will operate as usual during the 14-day partial lockdown that will last until March 31.
In addition, the wider market will continue trading to enable investors to manage their risks and opportunities during this period.
