KUALA LUMPUR (Sept 9): A fresh selldown of rubber glove stocks amid increasing Covid-19 vaccine hopes dragged the FBM KLCI to a two-month intraday low of 1,494.19 yesterday, although the benchmark index managed to stay afloat supported by gains in index constituents such as Tenaga Nasional Bhd (TNB) and Malayan Banking Bhd (Maybank).

The KLCI closed 2.94 points or 0.19% higher at 1,519.32 despite remaining in the red for most of the session. The index was also pressured by lower crude oil prices and the anticipation of Bank Negara Malaysia's Monetary Policy Committee meeting later this week.

Inter-Pacific Securities Sdn Bhd's Victor Wan said the consolidation of the KLCI was still ongoing as market interest continued to wane after the extended rally seen over the past few months.

The market saw a steady uptrend from March, led by the rally among glove makers and companies manufacturing personal protective equipment, with the KLCI touching a seven-month high of 1,611.42 on July 29, before subsequently consolidating.

"We will likely see more of the same trend in the near term, with profit-taking and selling activities to continue, while the index-linked stocks will likely see institutional support to maintain the index above the 1,500 psychological level," Wan told The Edge.

The index was dragged by rubber glove stocks, as Top Glove Corp Bhd and Hartalega Holdings Bhd were among the laggards of the 30 constituent stocks. This was offset by gains in TNB and Maybank.

Two other glove makers — Kossan Rubber Industries Bhd and Supermax Corp Bhd — also saw declines and were among the top losers of the bourse yesterday.

Asia Times reported that three Chinese-made vaccines purported to be safe and effective against Covid-19 had made their debut at a local trade fair, the first to be held for domestic and overseas traders in Beijing since the pandemic first erupted in the country in late December.

"China National Biotech Group, a subsidiary of the state-owned conglomerate China National Pharmaceutical Group Co Ltd, and the Nasdaq-listed Sinovac Biotech Ltd are showcasing at the China International Fair for Trade in Services in Beijing their respective vaccines, both of which are nearing the end of their final, third-stage clinical trials," said the report.

The publication reported that the three vaccines would be ready to hit the market by year end and annual production could be ratcheted up to 600 million doses, enough to inoculate roughly half of China's population.

The selldown of rubber glove stocks also came amid reports of a new Covid-19 vaccine from the University of Oxford, which will be commencing early-stage human trials in Australia.

Areca Capital Sdn Bhd chief executive officer Danny Wong Teck Meng said it is normal for investors to take profit on glove counters especially after the substantial gains in the past few months.

"When the prices keep on going up, there will be some profit-taking, so [a pullback of] anything between 15% and 20% is healthy.

"As we always look beyond the short term, I am pretty okay with glove counters' fundamentals as they are expected to continue to deliver good earnings in coming quarters. Hence, fundamentally speaking, I will still hold glove stocks," Wong added.

MIDF Research head of research Imran Yassin Md Yusof said: "There are concerns of an oversupply of gloves once the vaccines for the coronavirus kick in, which may cause the demand to fall from its peak."

The bonus issues implemented by some glove makers have also boosted the trading liquidity of their shares.

In addition, the expiry of the loan moratorium at the end of September might have also contributed to the selldown as retail investors sought to take profit to repay their bank borrowings, he said.

Top decliner Kossan fell 8.76% or RM1.20 to RM12.50, while Top Glove dropped 7.73% or 64 sen to RM7.64, Supermax sank 6.56% or 59 sen to RM8.41, and Hartalega declined 2.86% or 40 sen to RM13.60.

The gainers were led by Nestle (Malaysia) Bhd and Petronas Dagangan Bhd.

The Bursa Malaysia Healthcare index, which includes rubber glove manufacturers, saw the biggest decline among the sectoral indices, falling 4% to 3,594.10, followed by the Technology index (down 2.54%) and Energy index (down 1.65%).