PETALING JAYA: Rubber glove stocks saw a strong upward surge on price and accompanying volumes, topping the gainers and volume list as bargain hunting crept in after the market started the month of April on a sombre note.
The bounce in rubber glove stocks closely follows recent developments where the US Customs and Border Protection (CBP) and the US’ Secretary of the Treasury had at the end of March published a forced labour finding against disposable gloves produced by Top Glove Corp Bhd, which is the biggest rubber glove maker in the world by capacity.
At the beginning of this month, sentiment on Top Glove was generally at a low point following these claims by the US CBP.
Top Glove said on Apr 1 that it had clarified with the CBP saying that there are no new additional issues on the forced labour matter that have been discovered or added.
Following this press statement by Top Glove, its share price had recovered and climbed by 8.6% in a span of about a week.
The Bursa Malaysia Healthcare Index of which glove stocks are a constituent led gains on the Bursa Malaysia yesterday adding 4.73% to 3,116.83 while the benchmark FBM KLCI was marginally higher by 1.81 points to 1,602.4 at its close.
CGS-CIMB said in a report earlier this week that glove stocks such as Top Glove and Supermax had seen strong net inflows by foreign investors in recent times.
It noted that Top Glove and Supermax are among the top three stocks on the buy list of foreign investors this year through April 2, attracting net inflows of approximately RM1.4bil (US$340mil).
In another report, Kenanga Research said glove stocks are trading at “unwarranted” six times to 10 times 2022 price to earnings ratios and with attractive dividend yields of 6%-8%.
Kenanga said Malaysian glove players are attractive as they also command a majority or 65%-68% of the global market share presently.