KUALA LUMPUR, Dec 17 — The lifting of short selling ban by Bursa Malaysia Bhd and Securities Commission (SC) on January 1, 2021 has been viewed to have a muted impact on the overall bourse.

Kenanga Research, in a note today, said only nine names out of a list of 46 stocks with total net short positions are FBM KLCI component stocks, including Top Glove Hartalega and Supermax.

"The lifting comes with tighter new measures — capping the net short position at four per cent and reducing the daily gross short position limit from three to two per cent — that may lessen volatility of potential shortselling transactions,” it said.

The research house said the FBMKLCI is now up six per cent year to date and over 38 per cent from the March bottom, hence, the lifting of the ban is probably timely and welcomed.

Yesterday, Bursa Malaysia and SC announced that they would lift the temporary suspension of regulated short selling (RSS) and have reviewed other market management measures introduced this year following heightened market volatility arising from the broader impact of Covid-19.

The suspension of RSS, scheduled to expire on December 31, 2020, will be uplifted on Jan 1 to facilitate investors’ risk management and revive securities borrowing and lending activities, which is an integral capital market function to promote product development and market making activities, they said.

The research house added that, given the strong rally in the month-to-date witnessed on the FBM KLCI where it rose 7.6 per cent resoundingly outperforming the rest of ASEAN, the reintroduction of the RSS is probably timely if only to temper the emerging animal spirits and make this recovery more sustainable.

"We remain positive on this market with an 2021 year-end target of 1,803 points,” it said. — Bernama