Short Position – Platform for Rubber Glove Futures?
Take advantage of rubber gloves
As local glove makers scramble to fulfill orders, a wave of middlemen has emerged.
Try placing a large order today from one of the top glove manufacturers, and you’ll be on a long waiting list.
But there are brokers who can help you fill your orders. A modus operandi of brokers is to buy back orders from parties that no longer need gloves
Assuming you were running a business that generally required the use of a large amount of rubber gloves.
A good example is a chain of cosmetic clinics.
Before Covid-19, it was business as usual, and as a result, your orders were placed at the prices prevailing at the time. But with the onset of the pandemic, your business operations have been drastically reduced, but you still have those glove orders that have been placed and rightly need to be delivered to you.
So, in such situations, an intermediary with this information can now contact you to “buy” your order, at a higher price than you paid. This broker will in turn be able to place this order to a desperate buyer at a more lucrative price.
Some reports indicate that spot glove prices have skyrocketed to 400% in the past few months as panic glove buying ensued.
Essentially, this means that there is now a futures market for these gloves.
Maybe now is the right time for someone to create a credible platform for glove futures as it would help establish a better price discovery process for the commodities and possibly eliminate profiteers. unscrupulous who now monopolize commerce.
MOST people are bracing for tough times in the months ahead. The moratorium on loan repayments will end next month and the hour of truth will set in for ordinary households.
Those who are unable to pay have the advantage of negotiating a new repayment schedule with the banks. However, they must also prove that their income has been affected by the Covid-19 pandemic.
No one really knows how long it will take before the economy returns to normal. This is because the crisis is affecting the man in the street this time around, as most small businesses are experiencing a decline in turnover.
Examining the growth of business loans for used cars gives an indication of the length of troubled times.
When the economy improves, transactions in used car markets pick up.
To that end, ELK Desa Resources Bhd, which is arguably the biggest used car lender, expects the dire situation to continue for another year. In its latest results, ELK-Desa, which was once better known among second-hand dealers as Eng Lian Credit, does not expect its hire-purchase portfolio to grow within a year.
He expects unemployment to rise significantly in the second half of the year and business confidence to deteriorate. He says private sector investment is moderate and that would translate into lower consumer spending.
ELK-Desa’s business model relates it to the situation on the ground. It is a non-bank lender and its hire-purchase segment specializes in low-value used cars.
This is an area where traditional financial institutions do not serve.
ELK Desa is also in the field of furniture business financing. This area is another segment that is largely useful for the poor but not served by traditional banks.
She said she was careful in her loans to the furniture segment and would only work with those who are credible.
Risk management at securities dealers
The overheating market took a hiatus yesterday, but it also means a number of investors must be sitting on losses.
The market fell 11.83 points to 1,564.59, due to lower prices for major stocks of rubber gloves.
Another interesting development, which may have contributed to Friday’s decline, is that a brokerage firm decided to halt contra trading in health-related stocks, which includes rubber glove companies.
So far, there is no indication that other brokerages are taking similar action.
The brokerage’s decision must have been based on ensuring that the brokerage is not at risk in the event of a sharp decline in the market.
But this raises some questions. What is the current state of risk management for brokerage firms?
Besides health-related stocks, many penny-listed stocks have also attracted speculative interest and have recently seen a sharp rise and fall in Bursa Malaysia.
After many market collapses in the past, Malaysian brokerage houses should have fine-tuned their risk management rules and been able to operate without having to suddenly change their rules.
Recall that the Asian financial crisis of 1997/98 led to a collapse of the stock market, massive corporate defaults and non-performing loans, leading to a banking crisis.
Between July 1997 and mid-January 1998, approximately $ 225 billion in stocks were wiped off the local stock market, impacting brokerage firms, some of which were bank-backed.
One response to this crisis has been to restructure corporate debt and recapitalize the banking sector.
The approach taken to implement reforms in the financial sector has transformed the Malaysian financial sector to what it is today – resilient and diverse.
That said, we must continue to remain alert to new challenges and emerging risk areas given a more sophisticated financial sector with new financial instruments and innovations.