Glovemakers shed RM11b in market value

This indicates investors are shifting from the Covid-19 pandemic-driven theme stocks to recovery-focused sectors in coming months

by PRIYA VASU / pic by TMR FILE

THE once red-hot rubber glove stocks seem to be losing their sizzle with investors despite the promise of strong earnings prospects with money moving into stocks that are set to benefit from a secular recovery in the economy.

The seven major rubber glovemakers listed on the local exchange lost a combined market value of RM11.15 billion at close yesterday, indicating that investors are shifting from the Covid-19 pandemic-driven theme stocks to recovery-focused sectors in the coming months.

The positive narrative for the glovemakers was cracked by news of Russia’s Sputnik V vaccine and then by Pfizer Inc’s. Yesterday, Moderna Inc said its Covid-19 vaccine was 94.5% effective in a preliminary analysis of a large late-stage clinical trial.

To make things worse, some 13,190 Top Glove Corp Bhd’s employees were reported to have been placed under the Enhanced Movement Control Order yesterday as the pandemic infected its workers in Klang.

Top Glove shares fell 7.46% or 0.58 sen to close at RM7.20 yesterday. Kossan Rubber Industries Bhd shares closed 6.01% or 40 sen lower at RM6.26.

Supermax Corp Bhd suffered a loss of 8.88% or 78 sen to close at RM8, while Hartalega Holdings Bhd lost 88 sen or 5.27% to end at RM14.50.

Rubberex Corp (M) Bhd shed 17 sen or 7.26% to close at RM2.06, while smaller producers like Careplus Group Bhd lost 7.89% or 24 sen to close at RM2.80 and Comfort Gloves Bhd closed 5.96% or 24 sen lower at RM3.79.

Bursa’s Healthcare Index was dragged down by the fall in glove stocks by 2.49% or 99.21 points lower to 3,889.66 points yesterday.

Top Glove contributed the most to the index decline, decreasing 6.94%, while Supermax had the largest drop, with an 8.09% fall.

Shares of companies primarily engaged in providing healthcare services, such as the IHH Healthcare Bhd, provided the biggest boost to the index, advancing 0.74% to close at RM5.44 on the news that IHH’s patient traffic in Malaysia and Singapore could recover in its third quarter in response to the Covid-19 higher resurgence cases.

Pharmaceutical company Kotra Industries Bhd also saw big gains in the healthcare index, rising 2.52% to RM3.25, followed by Duopharma Biotech Bhd that surged 0.76% to close at RM4.

This year, the healthcare index rose 211%, heading for the best year in at least the last 10 years. Bursa Malaysia’s healthcare members have a total market capitalisation of RM214.8 billion.

Money is moving back into cyclical counters, such as banks and utilities, thus, potentially adding more pressure in the coming days as investors view favourable stocks related to banking, tourism, aviation, leisure, gaming and property.

CIMB Group Holdings Bhd surged 33 sen to close at RM3.77, while Malayan Banking Bhd closed 2.65% higher at RM8.14. Genting Bhd surged 35 sen to close at RM4.14.