KUALA  LUMPUR (Dec 29): The FBM KLCI closed down 8.91 points or 0.54% at 1,634.99 today, partly due to rubber glove manufacturers’ share price drop although news on US President Donald Trump's approval of the nation's US$2.3 trillion (about RM9.32 trillion) stimulus package to counter the effects of the coronavirus pandemic supported world market gains.

Across Bursa Malaysia at 5pm, 9.17 billion securities were traded for RM4.22 billion as KLCI-linked glove manufacturers ended among the bourse's top decliners. 

Hartalega Holdings Bhd’s share price closed down 52 sen or 4.17% at RM11.94, Supermax Corp Bhd fell 33 sen or 5.16% to RM6.06, while Top Glove Corp Bhd dropped 25 sen or 3.99% to RM6.01.

Most-active stocks and top gainers included Sarawak Cable Bhd after the stock’s price closed up 17.5 sen or 50.72% at 52 sen, with some 168 million shares traded.

Fortress Capital Asset Management chief executive officer Thomas Yong said market sentiment has turned bearish on glove stocks since the announcement of Covid-19 vaccine availability despite the strong earnings performance achieved by the glove companies so far.

“Although the valuations of glove companies have come down significantly from a very high level in the early part of this year, the news on the rollout of vaccines will continue to weigh on the market sentiment surrounding glove stocks.

“A strong rebound in share price is unlikely but there might be opportunity when the valuation of glove stocks gradually normalise to their historical average,” said Yong.

According to Kenanga Investment Bank Bhd head of research Koh Huat Soon, the sell-down on glove manufacturers’ shares was observed to have begun in November 2020 as Covid-19 vaccines were approved globally.

"A lot of institutional funds have had overweight positions on these glove [shares], so perhaps I suspect that some of these funds may want to trim their overweight positions before the end of the year,” Koh told theedgemarkets.com today.

He said the main question among investors now is the sustainability of glove manufacturers' earnings beyond Covid-19-driven supernormal conditions to justify their share price levels.

"I think more clarity on this will emerge in time — sometime in the middle of next year possibly," he said.

Globally, it was reported that Asian shares rose on Tuesday, with Japanese stocks hitting a 30-year high, as investor risk was encouraged by a Brexit trade deal and hopes a long-awaited US pandemic relief package will be expanded.

It was reported that MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.45% after Trump's approval of the US$2.3 trillion stimulus package to counter the effects of the coronavirus pandemic.

"While the package still has to pass the Senate, Trump's approval on Sunday sent shares on Wall Street to record highs on Monday amid increased optimism about an economic recovery,” Reuters reported.