KUALA LUMPUR (Aug 17): The FBM KLCI closed down 3.85 points or 0.25% at 1,560.74 today while trade volume across Bursa Malaysia dropped below 10 billion securities as investors continued selling shares of rubber glove manufacturers.

At 5pm, Bursa volume stood at 8.8 billion securities worth RM4.95 billion. Bursa’s Healthcare Index, which tracks shares of companies including rubber glove manufacturers, ended down 2.83% to become the top percentage decliner among bourse gauges.

Maybank Investment Bank Bhd analyst Anand Pathmakanthan wrote in the research firm’s latest Malaysia strategy note that the "market faces a difficult and uncertain economic and earnings recovery path, with 2H20 downside risks including a potential windfall tax levy on the gloves sector”.

Anand said the powerful year-to-date share price rally in glove manufacturers is fundamentally grounded in sharply higher volume demand and average selling prices.

However, news including updates on the discovery of Covid-19 vaccines have curbed the rise in share prices of rubber glove manufacturers like Top Glove Corp Bhd, Supermax Corp Bhd, Kossan Rubber Industries Bhd and Hartalega Holdings Bhd, all of which ended among Bursa top decliners today.

Top Glove's share price closed RM1.40 or 5.88% lower at RM22.42, making it the leading decliner across Bursa. Supermax fell RM1.22 or 6.81% to RM16.70, Kossan dipped 72 sen or 5% to RM13.68 while Hartalega declined 46 sen or 2.87% to RM15.56.

Investors continued selling rubber glove manufacturers' shares today after disposing of them last Friday. It was reported then that rubber glove manufacturers' share prices closed down last Friday on speculation certain stockbroking firms were banning contra transactions involving glove manufacturers' shares.

Top Glove and Hartalega are KLCI stocks. Today, analysts said Top Glove and Hartalega's share-price drop was major a contributor to the KLCI's decline.

At 5pm today, the KLCI pared losses after falling to its intraday low of 1,543.04. Inter-Pacific Securities Sdn Bhd head of research Victor Wan told theedgemarkets.com that valuation of glove counters had been pushed higher as the Covid-19 pandemic led to expectations of higher demand for gloves to curb the spread of the outbreak. However, anticipation of  the potential mass production of Covid-19 vaccines has sparked a selldown in shares in rubber glove manufacturers, according to him.

As investors closely watch share prices of rubber glove manufacturers against the broader market, they would have also noticed that securities' trading volume across Bursa has appeared to normalise after rising to a new record high of 27.8 billion securities last Tuesday.

Last Friday, a total of 10.46 billion securities were traded for RM5.15 billion, followed by today's 8.8 billion securities worth RM4.95 billion.

Globally today, it was reported that Asian shares crept back towards recent peaks as Chinese markets swung higher, while investors waited to see if the recent sell-off in longer-dated US Treasuries would extend and maybe take some pressure off the beleaguered dollar.

It was also reported that oil prices rose today following news that China plans to ship large volumes of US crude in August and September, which outweighed concerns over a slowdown in demand recovery after the coronavirus pandemic and an uptick in supplies. Brent crude added 32 cents, or 0.7%, to US$45.12 a barrel by 0616 GMT, while US West Texas Intermediate crude was up 35 cents, or 0.8%, to US$42.36 a barrel, Reuters reported.