Frankly Speaking: Herd mentality or collective wisdom?

This article first appeared in The Edge Malaysia Weekly, on November 16, 2020 - November 22, 2020.
Frankly Speaking: Herd mentality or collective wisdom?
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A photo of a prominent investor visiting AT Systematization Bhd’s plant in Chemor, Perak, sparked a heated debate among the investing fraternity last week. The investor said on his blog on Nov 10 that more gloves would be required even when Covid-19 vaccines have proved to be effective, hence the demand for gloves is sustainable.

While it is not clear how many retail investors made the decision to buy shares in AT Systematization after reading the blog post, the counter saw a massive surge in volume and share price. In just four trading days, it jumped 70% to close at 22 sen last Thursday. It was the most actively traded counter for the week, and accounted for 23% of total trading volume on Bursa Malaysia last Monday.

This came after AT Systematization said on Nov 6 that it had appointed LKL Advance Metaltech Sdn Bhd to market, sell and distribute its natural rubber latex gloves and nitrile gloves.

AT Systematization, which makes industrial automation system and machinery, continued to make the headlines when it scrapped a plan to acquire industrial glove maker Pearl Glove Sdn Bhd last Wednesday and indicated it would instead focus on building its own glove production capacity.

It even said it expects to set up a glove manufacturing plant in Perak in a mere five months compared to the more typical one year. With its share price still holding well after the announcement, it appears that investors are quite comfortable with the change in plans.

AT Systematization has been loss-making in six of the last 10 years. Will its diversification into gloves help it turn around? How feasible are its plans? But it seems investors are not too concerned, judging by the interest in the stock.

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