Short-selling is BACK

"Short selling is an important element in capital market flexibility where it allows an investor to sell borrowed shares and to buy them back later to complete the transaction. It is usually used to hedge portfolio risk and also as a means to make a profit by buying back at a lower price."

Short selling was suspended at the height of the Asian financial crisis in 1997 to curb excessive speculation in the stock market. Malaysian capital market was one-sided with retail investors coming in only when there is certain period of steady increases. This doesn’t happen all the time, in fact historically on an average a bull market takes place only once in six or seven years. The performance will be dull for the rest of the time.

Today, Malaysia already has the framework in place to benefit from regulated short selling, and have enough control to avoid unhealthy market practices. Therefore, Short selling activity is allowed again on 23 March 2006, which has the capacity to increase velocity in the market and could attract more investors to the capital market. Besides, investor can create new strategies for investing.

However, the number of counters available for short selling would be limited to ''less than 100''. Does this affect the outcome? We will see…