KUALA LUMPUR (Jan 11): AmInvestment Bank Research has upgraded the glove sector to “overweight” on the back of robust demand growth expectations for FY19.

In a note today, the research house said according to the Malaysian Rubber Glove Manufacturers Association (Margma), the rubber glove industry has been growing at an average of 8–10% for the past 25 years and it expects this to continue in FY19.

It said the expected robust growth is underpinned by the expanding global healthcare sector as well as the increased awareness on the importance of hygienic practices throughout the industry, especially in emerging markets such as India and China.

“Currently, glove consumption per capita for emerging markets such as India and China is still low at around 2–6 gloves compared with circa 100–280 gloves for developed countries.

“Positively, we believe the nitrile-based rubber (NBR) price will continue to decline due to the falling prices of butadiene, which is an input cost for nitrile gloves.

“As NBR is a key input material for nitrile gloves, this is beneficial to the 'Big 3' producers (Top Glove, Kossan, Hartalega) as lower NBR prices will widen the nitrile rubber gloves’ margins,” it said.