Glove stocks surge in active trading

Margma said it was not anticipating an immediate impact from the US tariff hikes on Malaysian rubber gloves since it will only take effect in 2026.

KUALA LUMPUR: Bursa Malaysia-listed rubber glove counters got a huge boost yesterday, following the United States slapping steep tariff increases on China imports.

Tariffs on rubber medical and surgical gloves into the United States from China are set to more than triple from 7.5% to 25% in 2026.

Strong gains were seen in key glove counters including Hartalega Holdings Bhd that gained 86 sen to RM3.82, Kossan Rubber Industries Bhd which added 36 sen to RM2.74, Top Glove Corp Bhd which jumped 30 sen to RM1.26 and Supermax Corp Bhd that surged 21.5 sen to RM1.08.

Some of these were the most actively traded counters on the local bourse including Top Glove – which was the most active stock – Supermax, Hartalega and Careplus Group Bhd which jumped 7.5 sen to 38 sen.

Analysts are expecting an increase in demand from the US healthcare sector as they might switch supply sources for rubber gloves from China to Malaysia eventually.

But any eventual gains could vary among the rubber glove companies locally, depending on their business relationship and exposure to the US glove market.

The Malaysian Rubber Glove Manufacturers Association (Margma) said it was not anticipating an immediate impact from the US tariff hikes on Malaysian rubber gloves since it will only take effect in 2026.

“Though the news may bode well for Malaysian rubber glove players, we do not expect much immediate impact. However, we should not forget that the United States also has its own domestic production,” Margma president Onn Kim Hung said in a statement.

According to UOB Kay Hian (UOBKH) Research, glovemakers here can progressively reclaim market share from China, which may support average selling prices (ASPs) moving forward.

“While a rising tide lift all boats, we think Top Glove and Hartalega will be the main local beneficiaries from this potential structural change in demand, as they have larger production capacities and better presence in the US market,” it said.

With an “overweight” rating on the sector, UOBKH Research said any earnings impact may only occur in the second half of 2025 to 2026.

“We opine that there will be valuations re-rating on the sector, as investors’ sentiment increasingly price in the detrimental policies on China gloves exports over a medium to longer-term horizon.

“We now peg our target prices to a plus 0.5 standard deviation above average historical means, based on 2025 forecast earnings,” the research house said.

It noted that China had significantly increased its global market share from around 11% in 2019 to more than 30% last year as it capitalised on the Covid-19 pandemic to market its gloves.

“While China players predominantly produce polyvinyl chloride and nitrile gloves which constituted more than 85% of total sales in 2023, we see meaningful nitrile glove demand flowing back to Malaysian manufacturers after the US tariff hike is imposed,” UOBKH Research said.

MIDF Research said the tariff increase by the United States would likely increase the costs and these will be passed on to their customers which would then narrow the ASP gap, or result in Chinese glovemakers charging higher ASPs compared to manufacturers in Malaysia or Thailand.

“Given the ample production capacity among existing players, we think US medical glove importers are likely to shift their sourcing from China to other glovemakers before the tariff imposition in 2026,” it said.“Malaysian glovemakers’ established market presence and reputation for high-quality products in the United States are well-positioned to secure any sales orders if US hospitals move away from suppliers in China.

“However, we do not rule out the possibility that imports of medical gloves from other countries may be the next target, considering the initiatives to support the domestic medical supply industry,” MIDF Research added.

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