-->

Type something and hit enter

On

KUALA LUMPUR (Aug 18): Glove counters staged a strong rebound with most seeing over 5% gains this morning following the heavy selldown during the past few trading days after a slew of negative news pummelled the glove sector.

The smaller-cap glove counters, for instance Rubberex Corp (M) Bhd, Comfort Gloves Bhd and Careplus Group Bhd, are leading the pack in percentage terms at the time of writing.

Rubberex surged 45 sen or 10.42% to RM4.77, while Comfort Gloves rose 36 sen or 10% to RM3.96. Careplus gained slightly shy of 10%, up 28 sen or 9.03% to RM3.38.

The big four glove counters also saw their share prices soar, all making appearances on Bursa Malaysia’s top gainers list.

Top Glove Corp Bhd led the pack, spiking RM1.28 or 5.71% to RM23.70, while Supermax Corp Bhd followed behind, rising RM1 or 5.99% to RM17.70. Hartalega Holdings Bhd shares climbed 86 sen or 5.53% to RM16.42, while Kossan Rubber Industries Bhd stood at RM14.26, up 58 sen or 4.24%.

The recent spate of news surrounding the glove industry had negatively impacted glove makers, erasing a total of RM52.85 billion worth of market capitalisation from the seven glove counters.

Advances in the development of vaccines and treatments, the most recent being Chinese vaccine specialist CanSino Biologics Inc securing the first Covid-19 vaccine patent approval from Beijing for its Covid-19 vaccine candidate Ad5-nCOV yesterday, have spooked investors.

Additionally, speculation is rife that the government could be eyeing the glove sector’s record earnings as the next target for a new windfall tax to ease its tight fiscal position.

"The juxtaposition of supernormal profits being generated by the glove sector and the government's extremely challenging fiscal outlook [is] raising the risk of windfall taxes being imposed on glove manufacturers," said Maybank IB Research in its research note yesterday.

The investment bank foresees the likelihood of the government announcing the windfall tax in the upcoming National Budget 2020/21 in November, citing the case of a windfall tax imposed on the plantation sector in 1998.

Amidst the still-fresh negative publicity, the renewed interest in glove counters come as their share prices stray away from the all-time highs recorded over the past few weeks, presenting investors with a possible bargain.

Whether investors would be taking up that bargain would depend on their outlook on the glove sector, and a foreign fund manager pointed out that a fair question to ask is which other sectors would offer great earnings growth in the next two to three quarters in the current economic conditions.

"Even if a vaccine is successfully developed, it does not mean it would be available to the public immediately. Furthermore, there is already a change in lifestyle, rubber glove usage has become part of our daily life. In short, the demand will remain, although it may weaken,” said the fund manager, who believed that the selling on the glove counters has been overdone.

http://www.theedgemarkets.com/article/glove-counters-rebound-strongly-despite-lingering-negative-news
Back to Top
Back to Top