Glove stocks up as Covid-19 rise checks vaccine-driven optimism

Glove stocks up as Covid-19 rise checks vaccine-driven optimism
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KUALA LUMPUR (Nov 20): Rubber glove manufacturers Top Glove Corp Bhd, Hartalega Holdings Bhd and Supermax Corp Bhd rose among Bursa Malaysia top gainers in morning trades today on bargain hunting and as the rise in the number of global Covid-19 cases checked investors’ vaccine-driven optimism.

At 10:27am, Hartalega added 40 sen or 2.84% to RM14.50, Supermax rose 39 sen or 5.03% to RM8.15 while Top Glove was 19 sen or 2.74% higher at RM7.13.

Investors bargain hunted for glove manufacturers’ shares today following a drop in prices of these stocks as news on encouraging results from Covid-19 vaccine trials appear to dent optimism on glove demand to curb the spread of the pandemic.

News on Covid-19 vaccine trials under the Pfizer Inc-BioNTech collaboration and Moderna Inc have been closely followed.

It was reported yesterday that Pfizer and BioNTech said they could secure emergency US and European authorisation for their Covid-19 vaccine next month after final trial results showed it had a 95% success rate and no serious side effects.

It was reported that Moderna on Monday released preliminary data for its vaccine showing 94.5% effectiveness.

"Pfizer said it expects to make as many as 50 million vaccine doses this year, enough to protect 25 million people, and then produce up to 1.3 billion doses in 2021," Reuters reported.

In Malaysia, RHB Investment Bank Bhd said yesterday Covid-19 vaccine deployment could be a new demand source for rubber gloves at up to 18 billion pieces a year assuming that 60% of the world’s population of 7.5 billion people will get the vaccine in two doses annually. 

"As each contact with a person should lead to the usage of one pair of disposable gloves, a vaccine deployment will generate demand of 18 billion pieces per annum in the short term. If the vaccine protection period is only up to a year, this 18 billion pieces per annum demand will recur on an annual basis. This is equivalent to 6.8% of the 263 billion pieces per annum global gloves demand in 2019,” RHB analyst Alan Lim wrote in a note.

As glove-related share prices rise, analysts are mindful about the broader economic and market impact from the rising number of global Covid-19 cases.

Reuters reported today that positive news about possible vaccines had helped push the MSCI World Index to a record high earlier in the week, but investors pulled back as a host of countries announced record infection rates and tougher lockdowns to curb the virus' spread.

On the Malaysian stock market, Hong Leong Investment Bank Bhd analyst Ng Jun Sheng wrote in a note today the investment bank reiterated its view that the local bourse is ripe for further profit taking consolidation after the FBM KLCI rallied from a low of 1,452 points to a high of 1,613, on the back of factors including lingering concerns about a fragile global economic outlook due to surging Covid-19 infections and new lockdowns.

"Key supports are pegged at 1,576-1,555-1,535 levels whilst resistances are situated near 1,600-1,618-1,633 levels,” Ng said.

On Bursa Malaysia today, the 30-stock KLCI rose 4.55 points or 0.29% to 1,588.23 at 11:01am while the Bursa’s Healthcare Index, whose constituents include rubber glove manufacturers, climbed 50.82 points or 1.3% to 3,954.54.

Top Glove and Hartalega are also KLCI constituents.