Kossan, Top Glove among Bursa top gainers on weaker ringgit

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KUALA LUMPUR (June 4): Kossan Rubber Industries Bhd and Top Glove Corp Bhd rose 5% and 4% respectively in anticipation that a weaker ringgit would boost exports and income.

At 5pm, Kossan (fundamental: 2.1; valuation: 0.5) rose 32 sen to close at RM6.90 while Top Glove (fundamental: 2.5; valuation: 1.3) added 21 sen to RM5.51. Kossan was the third-largest gainer across Bursa Malaysia while Top Glove was the ninth-largest advancer.

“One possible reason is that the ringgit has further weakened, which will make their exports turn out better," Interpacific Securities Sdn Bhd remisier Sam Ng told theedgemarkets.com.

A weaker ringgit versus the US dollar bodes well for export-based rubber glove manufacturers as their US dollar-denominated income will be higher when converted into the ringgit.

The ringgit weakened to 3.6982 against the US dollar at the time of writing. Lower crude oil prices do not bode well for the ringgit as the commodity constitutes a crucial portion of the Malaysian economy.

The ringgit had also depreciated against a strengthening US dollar in anticipation of US interest rate hikes this year.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)