Top Glove, Hartalega sport uptrend as ringgit, oil price weakens

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KUALA LUMPUR (Dec 8): Rubber glove manufacturers Top Glove Corp Bhd, Hartalega Holdings Bhd and Kossan Rubber Industries Bhd sported a share price uptrend on weakening ringgit and lower crude oil prices.

Export-based glove manufacturers sell their products in the US dollar. As such, a weaker ringgit versus the US dollar translates into higher income for these firms when they convert their earnings into the ringgit.

Glove manufacturers also benefit from lower crude oil prices. Synthetic rubber or nitrile, which is derived from crude oil, is a crucial raw material for glove production.
At 12.30pm, Top Glove increased one sen or 0.2% to RM4.70 while Hartalega rose two sen or 0.3% to RM6.79. For comparison, the KLCI fell 7.66 points or 0.4%.

Kossan climbed one sen or 0.2% to RM4.62.

However, Supermax Corp Bhd remained unchanged at RM2.05. The stock had earlier
risen as much as three sen or 1.5% to RM2.08.

The ringgit was traded at 3.5048 against the strengthening US dollar as at 1.04pm. This compares to 3.1415 on August 28 this year.

The US dollar is strengthening on a more optimistic outlook on the US economy, hence, interest rate hike expectations are there. Rate hike expectations have resulted in funds flowing back into US-dollar denominated assets.

Crude oil prices have fallen on oversupply. Reuters reported that Brent crude for January delivery dropped to a low of US$67.73 a barrel today,

Oil prices fell more than a dollar at one stage on Monday after Morgan Stanley cut its forecast for Brent crude, approaching a five-year low hit early this month, and the market got little support from mixed Chinese trade data.