Glove vs. Non-glove counters (what investors are thinking?)
It is very obvious that there are two groups of investors at the moment.
The first group wants to be out of gloves because vaccine has arrived meaning no need of gloves anymore.
The second group wants to remain in gloves because orders for gloves are still full until next year, so why quit?
So what is the story here?
In the beginning, when we were first hit with covid,healthcare was the thing all investors think of because of demand. But in healthcare, we have many types that ranges from masks, hospitals, gloves and etc. Yet somehow, gloves was the most popular choice among all investors. it became a herd mentality. Why?
Easy. Because among the many other healthcare products. Glove made the most profit. That is not all. It was in overwheming demand. Orders that could not be kept up.
Because of Profit and Demand, all investors shared the same herd mentality. Due to that mindset, it allows many glove counters to be pushed to a new high last year.
So what is happening now?
Looking at the current stock prices for the gloves, it is very obvious that the first group decides to go to other sectors due to the vaccines and short-selling news. The three sectors that are very hot right now are Cryptocurrency, Semiconductor & Technology
Why cryptocurrency, semiconductor & technology?
Semiconductor because Greatech being pushed from 0.88 (last year) to 6.24 (now). So some expects other similar counters to reach the same height.
Techonology because of Joe biden winning the election. So some expects renewable energy counters to go up in price.
Cryptocurrency because of the rise of bitcoin and Elon musk (dogecoin). Cause of trend so it has to go up.
Glove? Orders to last till next year so people also expect the share price to go up due to scarcity of raw materials as well and treat it like gold and other minerals.
I can safely say the two winning sectors will be semiconductors and gloves.
Gloves are needed because governments around the world will definitely try to stock up as much as gloves as possible in the event of next pandemic. Trying to establish own glove factory in the first world countries are too costly. Since glove doesnt expire, it is wiser to stock it up as much as possible. Plus the cost to buy in Malaysia is cheap so its a win as long as other countries are willing to stock up as much and as early as possible.
Semiconductors are in the same boat. Costs are cheaper here therefore many foreign countries loves to deal with Malaysia semiconductor sectors.
It is unwise to say that semiconductor is more superior than gloves in the long run. At the end of the day, any companies that are able to buy new machineries to increase efficiency and reduce cost such as workers will emerge victorious.
In the end, both sectors must satisfy clients demands: high volume of quantity and low price.
At the moment, investors do think that it is a good idea to buy more glove counters. Reason being is because there are many news about new diseases being spread in other countries such as H5N8. It is not good to take it as non serious threat. Remember that we took covid19 non seriously before as well.
A lesson to learn from our past mistakes. Every government in the world agrees that gloves are a necessity. If they wish to do another lockdown in the future pandemic, they must be well stock up before they can do that.