Top Glove rises 3% on weaker ringgit


-A +A

KUALA LUMPUR (June 30): Top Glove Corp Bhd rose as much as 21 sen or 3% as investors anticipated the export-based company would benefit from a weaker ringgit versus the US dollar.

Shares of Top Glove (fundamental: 2.5; valuation: 1.1) rose to its highest so far today at RM6.80.

At 12.30pm, the stock narrowed its gains to settle at RM6.70, with some two million shares having changed hands. Top Glove's shares had risen 48% this year, outperforming the FBM KLCI's 3% decline.

At 1:15pm, the ringgit was traded at 3.7820 against the US dollar. This compared to the strongest level over the past one year at 3.1415 on August 28, 2014, according to Bloomberg data.

MIDF Amanah Investment Bank Bhd said investors were looking at "defensive stocks" such as Top Glove, which were deemed good investments in times of market volatility.

As export-based Top Glove sells its gloves in US dollars, a weaker ringgit translates into higher income when the company's US dollar-denominated earnings are converted into the Malaysian currency.

"They think Top Glove will benefit more from the current situation," MIDF said.
(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.)