Uptrend in glove shares just a short-term play, analysts say

by S BIRRUNTHA / Pic by MUHD AMIN NAHARUL

RUBBER glovemakers saw their share prices rise today along with a renewed buying interest in their stocks, as investors reacted to the World Health Organisation’s (WHO) declaration of monkeypox as a global health emergency.

The global outbreak has affected nearly 17,000 people in 74 countries so far, triggering the highest alert among various countries around the world.

Nevertheless, Rakuten Trade Research VP Thong Pak Leng viewed the share price rally among glovemakers today as a short-term play.

He said the rise in most healthcare counters today were due to investors weighing the ongoing concerns on the monkeypox outbreak worldwide. 

“I don’t think monkeypox is as serious as Covid-19. The rally could be short-term play.   

“Unless this whole situation triggers lockdowns, then it may be true. But if not, then the rally is not sustainable,” he told The Malaysian Reserve when contacted today.

Thong also opined that this could be an overreaction to the situation which has led to the uptrend of glove counters.  

The big four glove counters, namely Top Glove Corp Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Industries, were among the Bursa Malaysia’s top active list on Monday.

Top Glove saw its share price rising to an intraday high of RM1.04 from its intraday low of 99 sen, before closing unchanged at RM1.

Hartalega shares increased by three sen or 1.08% to RM2.80, while Supermax gained 1.5 sen or 1.83% to 84 sen.

Kossan, however, fell one sen or 0.76% to RM1.31 at close today.

Smaller glove rivals also saw their share price rising today, where Comfort Gloves Bhd rose 0.95% to 53 sen, Careplus Group Bhd gained 2.38% to 43 sen and Rubberex Corp (M) Bhd rose 0.96% to 52 sen.

Meanwhile, Bursa Malaysia’s Health Care Index also closed 0.09% or 1.49 points higher to 1,706.05.  

In a research note today, Hong Leong Investment Bank analyst Ng Jun Sheng said the aggressive expansion during the Covid-19 pandemic had tipped the rubber glove sector into an oversupply state, which will continue to weigh down the glovemakers.

He noted that the research house has maintained an ‘Underweight’ call on the gloves sector.

The Ministry of Health announced that it has already taken some initial steps, following the announcement of a Public Health Emergency of International Concern by the WHO on the monkeypox outbreak.

Health Minister Khairy Jamaluddin said this includes reminding all health facilities to be aware of the current situation of the infection, as well as increasing the detection of cases among patients that are under risk.

He added that a total of nine cases of suspected monkeypox had been notified to him up until last Saturday (July 23). However, all the cases were confirmed negative.