Supermax’s share price tops RM10 amid KLCI inclusion bets

Supermax’s share price tops RM10 amid KLCI inclusion bets
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KUALA LUMPUR (Oct 13): Supermax Corp Bhd’s share price rose as much 38 sen or 3.82% to RM10.34 so far today on expectation that the rubber glove manufacturer will be included in the 30-stock FBM KLCI during the next review of the index’s constituents before the end of this year and as investors anticipate the industry’s earnings growth as global Covid-19 infections rise.

At 11:16am today, Supermax pared gains at RM10.24 for a market value of about RM26.32 billion. The stock saw some 21 million shares traded.

Maybank Investment Bank Bhd (Maybank IB) analyst Wong Chew Hann wrote in a note on Friday (Oct 9) that Supermax's and rival glove manufacturer Kossan Rubber Industries Bhd's positions on Bursa Malaysia have risen in terms of market capitalisation, and they were the 20th and 24th largest stocks on the exchange when the investment bank's note was written.

"And, if their rankings (are) sustained, they could (be) featured as KLCI constituents in the next review,” Wong said.

According to her, the next review of KLCI constituents is expected to happen between next month and December 2020, using closing share prices on Nov 23.

"The constituent change(s) will be implemented after the market closes on the third Friday in December, i.e. Dec 18, and will be effective Monday, Dec 21. The potential changes clearly reflect a new Covid-19 landscape with the glove sector expected to post above-normal demand-driven profits and gaming (casino sector) falling victim [to] the pandemic,” Wong said.

Global Covid-19 have been rising. In the US for example, it was reported today that the number of new cases rose 11% last week compared to the previous seven days, with infections spreading rapidly in the Midwest, which reported some of the highest positive test rates.

Across Europe, it was reported that authorities said the number of people being treated in French intensive care units for Covid-19 exceeded 1,500 on Monday for the first time since May 27, raising fears of local lockdowns being imposed across the country.