KUALA LUMPUR (March 16): Malaysia rubber glove manufacturers’ share prices fell in morning trades today as global equity markets and the US dollar were roiled after the US Federal Reserve (Fed) cut interest rates to near zero on Sunday in an emergency move to mitigate the economic impact of the Covid-19 pandemic.

At 10:20am today, Top Glove Corp Bhd’s share price fell 19 sen or 3.04% to RM6.05 while Kossan Rubber Industries Bhd lost 14 sen or 2.76% to RM4.94.

Supermax Corp Bhd fell seven sen or 4.09% to RM1.64 while Hartalega Holdings Bhd was down eight sen or 1.32% at RM5.98.

In the broader market, the FBM KLCI fell 33.5 points or 2.49% to 1,311.25 at 10:37am.

CGS-CIMB Securities Sdn Bhd analysts Ivy Ng Lee Fang and Nagulan Ravi wrote in note today the research firm recommend investors to seek shelter in sectors that offer defensive earnings such as the rubber glove industry (Top Glove Corp Bhd, Hartalega Holdings Bhd, Kossan Rubber Industries Bhd).

The other sectors with defensive earnings that they recommended are “utilities (Tenaga Nasional Bhd, Malakoff Corp Bhd), telco (Digi.Com Bhd), healthcare (IHH Healthcare Bhd, KPJ Healthcare Bhd), consumers (Fraser & Neave Holdings Bhd, brewers and tobacco), Astro Malaysia Holdings Bhd, MISC Bhd, Dialog Group Bhd and Petronas Dagangan Bhd — or high-dividend-yielders”.

“We recommend investors to consider switching into the sectors most affected by the Covid-19 outbreak (e.g. tourism/travel-related) — like the Genting Bhd group and Malaysia Airports Holdings Bhd — once the spread of Covid-19 decelerates globally (potentially in late-2Q20),” they said.

Globally, Reuters reported that stock markets and the US dollar were roiled on Monday after the Fed slashed interest rates in an emergency move and its major peers offered cheap US dollars to break a logjam in global lending markets. 

It was reported that the Fed cut interest rates by 100 basis points on Sunday to a target range of 0% to 0.25%, and promised to expand its balance sheet by at least US$700 billion in coming weeks.

The aggressive policy steps were aimed at cushioning the economic impact as the breakneck spread of the coronavirus all but shut down more countries, but had only limited success in calming panicky investors, it said.

"The Fed’s rate cut combined with the promise of more bond buying pushed US 10-year Treasury yields down sharply to 0.66%, from 0.95% late on Friday.

"That pressured the US dollar at first, though it regained some ground as the Asian session wore on. The [US] dollar was last down 0.5% on the Japanese yen at 107.36, having fallen 1.7% earlier in the day. The euro was flat at US$1.1104,” the newswire reported.