KUALA LUMPUR (Jan 17): More counters tanked on Bursa Malaysia on Wednesday, with several hitting limit-down and a couple having their short-selling suspended, as heavy selling pressure that first affected a few stocks last week appear to have spread.

At least five companies — Sarawak Consolidated Industries Bhd (SCIB), YNH Property Bhd, Rapid Synergy Bhd, Jentayu Sustainables Bhd and Mercury Securities Bhd — hit limit-down.

Four companies — SCIB, Jentayu, Mestron Holdings Bhd and APB Resources Bhd — got their intra-day short-selling suspended on the same day, as the stocks fell more than 15% or 15 sen.

The sell-offs prompted Bursa to issue unusual market activity (UMA) queries, not just to Mercury and Jentayu, but also to Artroniq Bhd, which hit limit-down earlier this week.

All in, the stock exchange regulator has issued nine UMA queries since the start of this year, with only one — to Magna Prima Bhd — due to a recent sharp rise in its share price. 

The Edge has identified at least 11 companies whose shares have tanked since 2024 began, despite the earlier positive sentiment seen across Bursa Malaysia that was evidenced by a boom in trading volume.

Daily trading volumes across Malaysian listed equities hit an average 5.49 billion since Jan 1 — with a high of 6.96 billion shares recorded on Jan 8 — compared with 2023's daily average of 3.25 billion shares.

On Wednesday, daily trading volume remained elevated at 5.23 billion shares, but not because investors were buying.

The sell-off was so far largely among the small caps. While the benchmark FBM KLCI slipped 0.66% over the last two days, it was still up 2.51% since the start of the year.

The FBM Small Cap Index (comprising Main Market companies outside of the top 100 by market capitalisation), meanwhile, has fallen 3.02% since Monday, though it was still up 1.93% year to date (YTD). The ACE Index had the worst decline of 6.19% over the past two days, and is down 5.15% YTD.

The sell-off began last week with three counters — Rapid Synergy, YNH Property, and Imaspro — which are all linked to prominent investor Datuk Dr Yu Kuan Chon.

Rapid Synergy has lost 86.1% since the start of the year, YNH 71.3% and Imaspro 67.6%. Rapid and YNH, which hit limit-down in five of the last six trading days, had their lower limits frozen by Bursa on Wednesday at RM3.96 (Rapid) and RM1.22 (YNH), together with SCIB at 53.5 sen, "due to the counters trading at static limit down prices for two consecutive trading days".

Yu is the single largest shareholder in YNH Property (with a 32.58% stake) and in Rapid Synergy (22.8%). He is also the second single largest shareholder in Imaspro with 14.6% shareholding. So far, there have been no filings indicating shareholding changes at any of these companies.

Since Jan 9, these three stocks saw a whopping RM3.35 billion in market capitalisation evaporate. Yu's corresponding paper loss, based on his shareholdings, amounted to RM859.54 million.

The other eight counters had largely been climbing in recent months, with several reaching multi-year highs on Monday, before they tanked.

The most significant decline among these eight counters was Leform, which has dropped 64.3% since Monday, followed by SCIB (down 55%), Mercury Securities (48.6%), Artroniq (42.8%), Mestron (32.3%), APB (24.1%), Globetronics (15.3%), and Jentayu (13%).

Typically, shares of listed companies face heavy selling in instances of margin calls as their share prices drop. When those who pledge their shares are unable to keep their positions open by topping up the balance to the minimum margin, those shares undergo forced selling. This would result in further margin calls. In short, it will lead to a vicious cycle of margin calls and dropping prices.

However, it is quite rare to see margin calls being extended to more than a few days, according to brokers who spoke to The Edge.

It is anyone's guess right now as to what could be behind the prolonged sell-off in some of these counters, which have not seen significant changes in shareholdings despite the high volume traded.

Following the UMA queries, four companies pointed to potential land deals in the pipeline, namely Magna Prima, Rapid Synergy, YNH and SCIB, while others told the bourse that they are unaware of the reason behind the volatility in their share prices.

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