(Updated)

Glove shares slump on profit taking

Glove shares slump on profit taking
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KUALA LUMPUR (April 9): Share prices of rubber glove manufacturers Hartalega Holdings Bhd, Supermax Corp Bhd and Top Glove Corp Bhd slumped in morning trade on Bursa Malaysia today on profit taking after rising yesterday as investors weighed the resurgence in the number of new Covid-19 cases globally.

At 9.40am today, Hartalega’s share price had fallen 23 sen or 2.27% to RM9.91, Supermax dropped 23 sen or 4.72% to RM4.64 and Top Glove was down 12 sen or 2.22% at RM5.28.

Among other glove manufacturers, Comfort Gloves Bhd’s share price dropped 10 sen or 4.24% to RM2.26, while Kossan Rubber Industries Bhd was down eight sen or 2.19% at RM3.58.

Glove manufacturers are constituents of Bursa’s Health Care Index, which also tracks share prices of hospital operators and pharmaceutical companies.

Also at 9.40am today, the index had fallen 1.61% to become the top percentage decliner among Bursa gauges after rising 4.7% yesterday. 

Today, TA Securities Holdings Bhd analysts wrote in a note that strong gains in rubber glove counters yesterday lifted the healthcare sector by a robust 4.7%, fuelled by strong demand and the profit outlook sparked by resurgent Covid-19 cases worldwide. 

"Blue chips are likely to extend consolidation ahead of the weekend as trading momentum shifts back to the healthcare sector given the renewed spike in global Covid-19 cases, which would prop up demand and sustain rotation into rubber gloves, vaccine and PPE (personal protective equipment) plays,” the analysts said.

Share prices of the glove manufacturers had risen sharply at the onset of the Covid-19 pandemic before falling due to perceptions that progress in global Covid-19 vaccination to curb the spread of the pandemic will lead to less demand for gloves and as investors evaluated forced labour allegations against the glove manufacturing industry.

However, news of a resurgence in the number of Covid-19 cases in certain countries like India and Brazil could have reversed such perceptions of glove demand as the global community continued to contend with the impact of the pandemic.

It was reported today that Brazil yesterday set a daily record of 4,249 Covid-19 deaths, with overwhelmed hospitals running low on supplies and the Senate about to open an investigation into the response of the government of President Jair Bolsonaro, who has played down the pandemic from the start.

It was reported that more than 345,000 people have died of Covid-19 in Brazil, making it the second-deadliest outbreak after the one in the US, whose population is about 50% greater at about 330 million.

On India, it was reported today that the country reported 126,789 new Covid-19 cases yesterday and that daily infections surpassed 100,000 for the first time on Monday and have now exceeded that mark three times, marking the biggest daily rise in the world in the past week.

"The surge, much steeper than last year's first wave, has caught authorities by surprise. The government blames the resurgence mainly on crowding and a reluctance to wear masks as shops and offices have reopened. With 12.9 million cases, India is the third-worst affected country after the US and Brazil. Deaths rose by 685 — the most in five days — to 166,862, data from the health ministry showed,” Reuters reported.

In Malaysia yesterday, Areca Capital Sdn Bhd chief executive officer (CEO) Danny Wong told theedgemarkets.com that investors were bargain hunting for glove shares as valuations of the stocks had fallen to attractive levels.
Wong said foreign investors were keen on investing in glove shares in anticipation of stellar results from glove makers.

“The rally is sustainable if the glove makers' earnings trajectory is continued,” he said.