Malaysia has increased the number of stocks that investors are allowed to short from 100 to 171, broadening the trading strategies available on the Malaysian Exchange.
Short sellers operating on Bursa Malaysia can only short sell securities in stocks pre-determined by the exchange.
Trading activity on Bursa Malaysia has grown by more than 130% in just over four years, to US$481 billion. The exchange has deemed it a good time to increase the number of approved securities that can be shorted and that such activity will not adversely affect the market.
This expansion is also expected to bump general stock borrowing and lending activity on the market, as short sellers must first borrow securities or have identified a source of securities to borrow, before the seller can execute a short sale.
These 171 stocks can be borrowed either under the existing exchange rules within the ‘Exchange’s Securities Borrowing and Lending Agency’ or the ‘Securities Borrowing and Lending Negotiated Transactions’ regimes.
Total short selling trade value in Malaysia reached a monthly peak of RM293 million in June 2013 from zero in March 2012.