Glovemakers back in spotlight amid fear over Omicron variant

This triggers investors to renew interest in the healthcare sector as the variant was detected in more countries 


RUBBER glovemakers rallied as the fear of the Omicron variant of the Covid-19 virus saw investors to renew interest in the healthcare sector as the variant was detected in more countries. 

The identification of the new strain of virus amid fear of a fresh wave of the Covid-19 pandemic across the world boosted local healthcare stocks despite medical experts warning a clearer picture of the variant could take at least two weeks. 

The big four glove counters namely Top Glove Corp Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Industries Bhd were among the most actively traded on the exchange and among the top gainers yesterday. 

Rakuten Trade Research VP Thong Pak Leng said the rise in most healthcare counters was triggered by the concerns on the Omicron variant. 

“The rise in glove stocks yesterday was because of the Omicron variant which created fear and concerns of another potential outbreak of the pandemic. However, I think this is just a short-term play partly also due to temporary reallocation of funds from other sectors at the moment,” he told The Malaysian Reserve yesterday. 

The big four listed rubber glovemakers gained some RM8.16 billion in market capitalisation in active trading as the healthcare index rose 152 points or 6.38% to 2,540 points while the benchmark FTSE Bursa Malaysia KLCI closed 1.65 points lower at 1,510. 

Top Glove gained some RM4.4 billion in market capitalisation after its shares rose 55 sen or 20.83% to RM3.19 while Hartalega added RM2.56 billion in value after its shares ended up 75 sen or 13.27% to RM6.40. 

Supermax gained 30 sen or 16.22% to RM2.15 and Kossan grew 16 sen or 7.31% to RM2.35 at close yesterday. 

The gains would have been much more if not for some profit-taking in the final hour of trading yesterday. 

Smaller glove rivals such as Comfort Gloves Bhd climbed 14 sen or 11.48% to RM1.36 while Careplus Group Bhd gained 10 sen or 8.20 to RM1.32 and Rubberex Corp (M) Bhd rose 14 sen or 24.35% to 72 sen.

Thong said while world demand for gloves will continue to grow, he expects the fall in average selling prices (ASPs) will cause earnings of the companies to fall in financial year 2022 (FY22) and beyond.

The Omicron variant had spread around the world with new cases detected in the Netherlands, Denmark and Australia.

The variant was first reported to the World Health Organisation (WHO) on Nov 24 from South Africa, where infections have risen steeply. 

The WHO, in its latest guidance, said the Omicron variant is likely to spread internationally, posing a “very high” global risk of infection surges that could have “severe consequences” in some areas. 

The virus has an unprecedented number of spike mutations, some of which are concerning for their potential impact on the trajectory of the pandemic. 

The overall global risk related to the new variant has also been assessed as very high. 

Fear and the warning have prompted several countries across the globe to step up containment measures and tighten their Covid-19 travel restrictions to prevent the transmissibility of the new variant.